Adiponectin is an adipocyte-derived cytokine with beneficial effects on insulin sensitivity and the development of atherosclerosis. Id3 is a helix-loop-helix factor that binds to E-proteins such as E47 and inhibits their binding to DNA. Although the helix-loop-helix factor sterol regulatory element binding protein (SREBP)-1c is a known activator of adiponectin transcription, this study provides the first evidence of a role for Id3 and E47 in adiponectin expression. Decreased Id3 in differentiating adipocytes correlates with increased adiponectin expression and forced expression of Id3 inhibits adiponectin expression. Moreover, Id3-null mice have increased adiponectin expression in visceral fat tissue and in serum. We demonstrate that E47 potentiates SREBP-1c-mediated adiponectin promoter activation and that Id3 can dose-dependently inhibit this action via interaction with E47. Mutation of a consensus E47 binding site results in nearly complete loss of promoter activation. Furthermore, we demonstrate E47 binding to the endogenous adiponectin promoter both in vitro and in vivo by chromatin immunoprecipitation analysis. Binding is not detected in undifferentiated cells which express Id3 but peaks during differentiation in parallel with Id3 decline. This promoter binding can be completely abolished by the overexpression of Id3 and is enhanced in adipose tissue null for Id3. These data establish Id3 and E47 as novel regulators of SREBP-1c-mediated adiponectin expression in differentiating adipocytes and provide evidence that Id3 regulates adiponectin expression in vivo.