Activating transcription factor 3 (ATF3) is a stress-adaptive transcription factor that mediates cellular stress response signaling. We previously reported that ATF3 represses CCAAT/enhancer binding protein alpha (C/EBPalpha) expression and inhibits 3T3-L1 adipocyte differentiation. In this study, we explored potential role of ATF3 in negatively regulating peroxisome proliferator activated receptor-gamma (PPARgamma). ATF3 decreased the expression of PPARgamma and its target gene in 3T3-L1 adipocytes. ATF3 also repressed the activity of -2.6Kb promoter of mouse PPARgamma2. Overexpression of PPARgamma significantly prevented the ATF3-mediated inhibition of 3T3-L1 differentiation. Transfection studies with 5' deleted-reporters showed that ATF3 repressed the activity of -2037bp promoter, whereas it did not affect the activity of -1458bp promoter, suggesting that ATF3 responsive element is located between the -2037 and -1458. An electrophoretic mobility shift assay and chromatin immunoprecipitation assay demonstrated that ATF3 binds to ATF/CRE site (5'-TGACGTTT-3') between -1537 and -1530. Mutation of the ATF/CRE site abrogated ATF3-mediated transrepression of the PPARgamma2 promoter. Treatment with thapsigargin, endoplasmic reticulum (ER) stress inducer, increased ATF3 expression, whereas it decreased PPARgamma expression. ATF3 knockdown significantly blocked the thapsigargin-mediated downregulation of PPARgamma expression. Furthermore, overexpression of PPARgamma prevented inhibition of 3T3-L1 differentiation by thapsigargin. Collectively, these results suggest that ATF3-mediated inhibition of PPARgamma expression may contribute to inhibition of adipocyte differentiation during cellular stress including ER stress.