Activation of adipogenesis in 3T3 preadipocytes by exposure to the adipogenic inducers dexamethasone, methylisobutylxanthine, insulin, and fetal bovine serum is accompanied by a transient burst of C/EBP beta protein expression that precedes the induction of the fat gene program. In this study we have investigated the role of C/EBP beta in initiating the adipogenic program by overexpressing C/EBP beta in multipotential NIH-3T3 fibroblasts. Conditional ectopic expression of C/EBP beta was accomplished by using an artificial transcriptional regulatory system based on the Escherichia coli tetracycline repressor to generate a stable cell line, beta 2, that expresses C/EBP beta mRNA and protein in a tightly controlled tetracycline dose-dependent manner. Induction of C/EBP beta DNA-binding activity in NIH-3T3 beta 2 cells exposed to dexamethasone in the presence of insulin and fetal bovine serum activates the expression of an adipocyte-specific nuclear hormone receptor, PPAR gamma, that stimulates the conversion of these fibroblasts into committed preadipocytes. Either ectopic expression of C/EBP beta or treatment with dexamethasone alone is incapable of inducing PPAR gamma expression, but when present together, they have a synergistic effect on the adipogenic program. Exposure of these stimulated cells to a PPAR activator 5,8,11,14-eicosatetraynoic acid (ETYA) results in the accumulation of fat droplets and expression of the adipocyte-enriched genes aP2 and glycerol phosphate dehydrogenase (GPD). The number of beta 2 cells that can differentiate into adipocytes is related to the concentration of tetracycline and, therefore, the amount of the exogenous C/EBP beta protein expressed. C/EBP beta can induce PPAR gamma mRNA in the absence of ETYA; however, expression of aP2 mRNA and maximum fat deposition is dependent on the PPAR activator. Our results suggest that enhanced expression of C/EBP beta converts multipotential mesenchymal precursor cells into preadipocytes that respond to adipogenic inducers, including dexamethasone and PPAR activators to differentiate into adipocytes.