ADP-ribosylation factor (ARF)-related protein 1 (ARFRP1) is a GTPase regulating protein trafficking between intracellular organelles. Here we show that mice lacking Arfrp1 in adipocytes (Arfrp1(ad-/-)) are lipodystrophic due to a defective lipid droplet formation in adipose cells. Ratios of mono-, di-, and triacylglycerol, as well as the fatty acid composition of triglycerides, were unaltered. Lipid droplets of brown adipocytes of Arfrp1(ad-/-) mice were considerably smaller and exhibited ultrastructural alterations, such as a disturbed interaction of small lipid-loaded particles with the larger droplets, suggesting that ARFRP1 mediates the transfer of newly formed small lipid particles to the large storage droplets. SNAP23 (synaptosomal-associated protein of 23 kDa) associated with small lipid droplets of control adipocytes but was located predominantly in the cytosol of Arfrp1(ad-/-) adipocytes, suggesting that lipid droplet growth is defective in Arfrp1(ad-/-) mice. In addition, levels of phosphorylated hormone-sensitive lipase (HSL) were elevated, and association of adipocyte triglyceride lipase (ATGL) with lipid droplets was enhanced in brown adipose tissue from Arfrp1(ad-/-) mice. Accordingly, basal lipolysis was increased after knockdown of Arfrp1 in 3T3-L1 adipocytes. The data indicate that disruption of ARFRP1 prevents the normal enlargement of lipid droplets and produces an activation of lipolysis.