Brown adipocytes increase energy production in response to induction of PGC-1alpha, a dominant regulator of energy metabolism. We have found that the orphan nuclear receptor SHP (NR0B2) is a negative regulator of PGC-1alpha expression in brown adipocytes. Mice lacking SHP show increased basal expression of PGC-1alpha, increased energy expenditure, and resistance to diet-induced obesity. Increased PGC-1alpha expression in SHP null brown adipose tissue is not due to beta-adrenergic activation, since it is also observed in primary cultures of SHP(-/-) brown adipocytes that are not exposed to such stimuli. In addition, acute inhibition of SHP expression in cultured wild-type brown adipocytes increases basal PGC-1alpha expression, and SHP overexpression in SHP null brown adipocytes decreases it. The orphan nuclear receptor ERRgamma is expressed in BAT and its transactivation of the PGC-1alpha promoter is potently inhibited by SHP. We conclude that SHP functions as a negative regulator of energy production in BAT.