Wnt signaling through beta-catenin and TCF maintains preadipocytes in an un-differentiated proliferative state; however, the molecular pathway has not been completely defined. By integrating gene expression microarray, chromatin immunoprecipitation-chip, and cell-based experimental approaches, we show that Wnt/beta-catenin signaling activates the expression of COUP-TFII which recruits the SMRT corepressor complex to the first introns located downstream from the first exons of both PPAR gamma 1 and gamma 2 mRNAs. This maintains the local chromatin in a hypoacetylated state and represses PPAR gamma gene expression to inhibit adipogenesis. Our experiments define the COUP-TFII/SMRT complex as a previously unappreciated component of the linear pathway that directly links Wnt/beta-catenin signaling to repression of PPAR gamma gene expression and the inhibition of adipogenesis.