An outstanding question in adipocyte biology is how hormonal cues are relayed to the nucleus to activate the transcriptional program that promotes adipogenesis. The forkhead transcription factor Foxo1 is regulated by insulin via Akt-dependent phosphorylation and nuclear exclusion. We show that Foxo1 is induced in the early stages of adipocyte differentiation but that its activation is delayed until the end of the clonal expansion phase. Constitutively active Foxo1 prevents the differentiation of preadipocytes, while dominant-negative Foxo1 restores adipocyte differentiation of fibroblasts from insulin receptor-deficient mice. Further, Foxo1 haploinsufficiency protects from diet-induced diabetes in mice. We propose that Foxo1 plays an important role in the integration of hormone-activated signaling pathways with the complex transcriptional cascade that promotes adipocyte differentiation.