The most widely distributed members of the family of insulin receptor substrate (IRS) proteins are IRS-1 and IRS-2. These proteins participate in insulin and insulin-like growth factor 1 signaling, as well as the actions of some cytokines, growth hormone, and prolactin. To more precisely define the specific role of IRS-1 in adipocyte biology, we established brown adipocyte cell lines from wild-type and IRS-1 knockout (KO) animals. Using differentiation protocols, both with and without insulin, preadipocyte cell lines derived from IRS-1 KO mice exhibited a marked decrease in differentiation and lipid accumulation (10 to 40%) compared to wild-type cells (90 to 100%). Furthermore, IRS-1 KO cells showed decreased expression of adipogenic marker proteins, such as peroxisome proliferator-activated receptor gamma (PPARγ), CCAAT/enhancer-binding protein alpha (C/EBPα), fatty acid synthase, uncoupling protein-1, and glucose transporter 4. The differentiation deficit in the KO cells could be reversed almost completely by retrovirus-mediated reexpression of IRS-1, PPARγ, or C/EBPα but not the thiazolidinedione troglitazone. Phosphatidylinositol 3-kinase (PI 3-kinase) assays performed at various stages of the differentiation process revealed a strong and transient activation in IRS-1, IRS-2, and phosphotyrosine-associated PI 3-kinase in the wild-type cells, whereas the IRS-1 KO cells showed impaired phosphotyrosine-associated PI 3-kinase activation, all of which was associated with IRS-2. Akt phosphorylation was reduced in parallel with the total PI 3-kinase activity. Inhibition of PI 3-kinase with LY294002 blocked differentiation of wild-type cells. Thus, IRS-1 appears to be an important mediator of brown adipocyte maturation. Furthermore, this signaling molecule appears to exert its unique role in the differentiation process via activation of PI 3-kinase and its downstream target, Akt, and is upstream of the effects of PPARγ and C/EBPα.