Fibroblast growth factor-21 (FGF21) is a circulating hepatokine that beneficially affects carbohydrate and lipid metabolism. Here, we report that FGF21 is also an inducible, fed-state autocrine factor in adipose tissue that functions in a feed-forward loop to regulate the activity of peroxisome proliferator-activated receptor gamma (PPAR gamma), a master transcriptional regulator of adipogenesis. FGF21 knockout (KO) mice display defects in PPARg signaling including decreased body fat and attenuation of PPAR gamma-dependent gene expression. Moreover, FGF21-KO mice are refractory to both the beneficial insulin-sensitizing effects and the detrimental weight gain and edema side effects of the PPAR gamma agonist rosiglitazone. This loss of function in FGF21-KO mice is coincident with a marked increase in the sumoylation of PPAR gamma, which reduces its transcriptional activity. Adding back FGF21 prevents sumoylation and restores PPAR gamma activity. Collectively, these results reveal FGF21 as a key mediator of the physiologic and pharmacologic actions of PPAR gamma.