Obesity and metabolic syndrome are increasingly recognized as major risk factors for cardiovascular disease. Herein we show that Krüppel-like transcription factor 5 (KLF5) is a crucial regulator of energy metabolism. Klf5^+/− mice were resistant to high fat–induced obesity, hypercholesterolemia and glucose intolerance, despite consuming more food than wild-type mice. This may in part reflect their enhanced energy expenditure. Expression of the genes involved in lipid oxidation and energy uncoupling, including those encoding carnitine-palmitoyl transferase-1b (Cpt1b) and uncoupling proteins 2 and 3 (Ucp2 and Ucp3), was upregulated in the soleus muscles of Klf5^+/− mice. Under basal conditions, KLF5 modified with small ubiquitin-related modifier (SUMO) proteins was associated with transcriptionally repressive regulatory complexes containing unliganded peroxisome proliferator–activated receptor-δ (PPAR-δ) and co-repressors and thus inhibited Cpt1b, Ucp2 and Ucp3 expression. Upon agonist stimulation of PPAR-δ, KLF5 was deSUMOylated, and became associated with transcriptional activation complexes containing both the liganded PPAR-δ and CREB binding protein (CBP). This activation complex increased the expression of Cpt1b, Ucp2 and Ucp3. Thus, SUMOylation seems to be a molecular switch affecting function of KLF5 and the transcriptional regulatory programs governing lipid metabolism.