Transcriptional regulators are crucial in adipocyte differentiation. We now show that the homeodomain-containing transcription factor Prep1 is a repressor of adipogenic differentiation since its down-regulation (DR) in both ex vivo bone marrow-derived mesenchymal stromal cells (MSC) and in vitro 3T3-L1 preadipocytes significantly increases their adipogenic differentiation ability. Prep1 acts at a stage preceding the activation of the differentiation machinery because its DR makes cells more prone to adipogenic differentiation even in the absence of the adipogenic inducers. Prep1 DR expands the DNA binding landscape of C/EBPβ (CCAAT enhancer binding protein β) without affecting its expression or activation. The data indicate that Prep1 normally acts by restricting DNA binding of transcription factors to adipogenic enhancers, in particular C/EBPβ.