Increased plasminogen activator inhibitor-1 (PAI-1) is linked to obesity and insulin resistance. However, the functional role of PAI-1 in adipocytes is unknown. This study was designed to investigate effects and underlying mechanisms of PAI-1 on glucose uptake in adipocytes and on adipocyte differentiation. Using primary cultured adipocytes from PAI-1(+/+) and PAI-1(-/-) mice, we found that PAI-1 deficiency promoted adipocyte differentiation, enhanced basal and insulin-stimulated glucose uptake, and protected against tumor necrosis factor-alpha-induced adipocyte dedifferentiation and insulin resistance. These beneficial effects were associated with upregulated glucose transporter 4 at basal and insulin-stimulated states and upregulated peroxisome proliferator-activated receptor-gamma (PPARgamma) and adiponectin along with downregulated resistin mRNA in differentiated PAI-1(-/-) vs. PAI-1(+/+) adipocytes. Similarly, inhibition of PAI-1 with a neutralizing anti-PAI-1 antibody in differentiated 3T3-L1 adipocytes further promoted adipocyte differentiation and glucose uptake, which was associated with increased expression of transcription factors PPARgamma, CCAAT enhancer-binding protein-alpha (C/EBPalpha), and the adipocyte-selective fatty acid-binding protein aP2, thus mimicking the phenotype in PAI-1(-/-) primary adipocytes. Conversely, overexpression of PAI-1 by adenovirus-mediated gene transfer in 3T3-L1 adipocytes inhibited differentiation and reduced PPARgamma, C/EBPalpha, and aP2 expression. This was also associated with a decrease in urokinase-type plasminogen activator mRNA expression, decreased plasmin activity, and increased collagen I mRNA expression. Collectively, these results indicate that absence or inhibition of PAI-1 in adipocytes protects against insulin resistance by promoting glucose uptake and adipocyte differentiation via increased PPARgamma expression. We postulate that these PAI-1 effects on adipocytes may, at least in part, be mediated via modulation of plasmin activity and extracellular matrix components.