PPARγ (Peroxisome proliferator-activated receptor γ) is a nuclear receptor involved in lipid homeostasis and related metabolic diseases. Acting as a transcription factor, PPARγ is a master regulator for adipocyte differentiation. Here, we reveal that CHIP (C-terminus of HSC70-interacting protein) suppresses adipocyte differentiation by functioning as an E3 ligase of PPARγ. CHIP directly binds to and induces ubiquitylation of the PPARγ protein, leading to proteasome-dependent degradation. Stable overexpression or knockdown of CHIP inhibited or promoted adipogenesis, respectively, in 3T3-L1 cells. On the other hand, a CHIP mutant defective in E3 ligase could neither regulate PPARγ protein levels nor suppress adipogenesis, indicating the importance of CHIP-mediated ubiquitylation of PPARγ in adipocyte differentiation. Lastly, a CHIP null embryo fibroblast exhibited augmented adipocyte differentiation with increases in PPARγ and its target protein levels. In conclusion, CHIP acts as an E3 ligase of PPARγ, suppressing PPARγ-mediated adipogenesis.