The fat mass and obesity associated. FTO, gene has been shown to be associated with obesity in human in several genome-wide association scans. In vitro studies suggest that Fto may function as a single-stranded DNA demethylase. In addition, homologous recombination-targeted knockout of Fto in mice resulted in growth retardation, loss of white adipose tissue, and increase energy metabolism and systemic sympathetic activation. Despite these intense investigations, the exact function of Fto remains unclear. We show here that Fto is a transcriptional coactivator that enhances the transactivation potential of the CCAAT/enhancer binding proteins (C/EBPs) from unmethylated as well as methylation-inhibited gene promoters. Fto also exhibits nuclease activity. We showed further that Fto enhances the binding C/EBP to unmethylated and methylated DNA. The coactivator role of FTO in modulating the transcriptional regulation of adipogenesis by C/EBPs is consistent with the temporal progressive loss of adipose tissue in the Fto-deficient mice, thus suggesting a role for Fto in the epigenetic regulation of the development and maintenance of fat tissue. How FTO reactivates transcription from methyl-repressed gene needs to be further investigated. (C) 2010 Elsevier Inc. All rights reserved.