A diponectin, an adipocyte-derived hormone, was recently shown to have potential therapeutic applications in diabetes and obesity because of its influence on glucose and lipid metabolism. We found that brown fat in normal human bone marrow contains this protein and used marrow-derived preadipocyte lines and long-term cultures to explore potential roles in hematopoiesis. Recombinant adiponectin blocked fat cell formation in long-term bone marrow cultures and inhibited the differentiation of cloned stromal preadipocytes. Adiponectin also caused elevated expression of cyclooxygenase-2 (COX-2) by these stromal cells and induced release of prostaglandin E₂ (PGE₂). The COX-2 inhibitor Dup-697 prevented the inhibitory action of adiponectin on preadipocyte differentiation, suggesting involvement of stromal cell–derived prostanoids. Furthermore, adiponectin failed to block fat cell generation when bone marrow cells were derived from B6,129S^Ptgs2tm1Jed (COX-2^+/–) mice. These observations show that preadipocytes represent direct targets for adiponectin action, establishing a paracrine negative feedback loop for fat regulation. They also link adiponectin to the COX-2–dependent PGs that are critical in this process.