The Wnt/β-catenin signalling pathway appears to operate to maintain the undifferentiated state of preadipocytes by inhibiting adipogenic gene expression. To define the mechanisms regulating suppression of Wnt/β-catenin signalling, we analysed the β-catenin expression in response to activation of transcription factors that regulate adipogenesis. The results show an extensive down-regulation of nuclear β-catenin that occurs during the first few days of differentiation of 3T3-L1 preadipocytes and coincides with the induction of the adipogenic transcription factors, C/EBPβ (CCAAT-enhancer-binding protein) and PPARγ (peroxisome-proliferator-activated receptor). To assess the role of each of these factors in this process, we conditionally overexpressed C/EBPβ in Swiss mouse fibroblasts using the TET-off system. Abundant expression of C/EBPβ alone had minimal effect on β-catenin expression, whereas expression of C/EBPβ, in the presence of dexamethasone, induced PPARγ expression and caused a measurable decrease in β-catenin. In addition, exposure of cells expressing both C/EBPβ and PPARγ to a potent PPARγ ligand resulted in an even greater decrease in β-catenin by mechanisms that involve the proteasome. Our studies also suggest a reciprocal relationship between PPARγ activity and β-catenin expression, since ectopic production of Wnt-1 in preadipocytes blocked the induction of PPARγ gene expression. Moreover, by suppressing β-catenin expression, ectopic expression of PPARγ in Wnt-1-expressing preadipocytes rescued the block in adipogenesis after their exposure to the PPARγ ligand, troglitazone.