The family of mammalian Sirtuin proteins comprises seven members homologous to yeast Sir2. Here we show that SIRT2, a cytoplasmic sirtuin, is the most abundant sirtuin in adipocytes. Sirt2 expression is downregulated during preadipocyte differentiation in 3T3-L1 cells. Overexpression of SIRT2 inhibits differentiation, whereas reducing SIRT2 expression promotes adipogenesis. Both effects are accompanied by corresponding changes in the expression of PPARgamma, C/EBPalpha, and genes marking terminal adipocyte differentiation, including Glut4, aP2, and fatty acid synthase. The mechanism underlying the effects of reduced SIRT2 in 3T3-L1 adipocytes includes increased acetylation of FOXO1, with direct interaction between SIRT2 and FOXO1. This interaction enhances insulin-stimulated phosphorylation of FOXO1, which in turn regulates FOXO1 nuclear and cytosolic localization. Thus, Sirt2 acts as an important regulator of adipocyte differentiation through modulation of FOXO1 acetylation/phosphorylation and activity and may play a role in controlling adipose tissue mass and function.