Brown adipocytes oxidize fatty acids to produce heat in response to cold or to excessive energy intake; stimulation of brown fat development and function may thus counteract obesity. Brown adipogenesis requires activation of the transcription factor C/EBPβ and recruitment of the zinc finger protein Prdm16, but upstream inducers of these proteins are incompletely defined. Here, we show that genetic inactivation of Plac8, a gene encoding an evolutionarily conserved protein, induces cold intolerance, and late-onset obesity, as well as abnormal morphology and impaired function of brown adipocytes. Using brown preadipocyte lines we show that Plac8 is required for brown fat differentiation, that its overexpression induces C/EBPβ and Prdm16, and that upon induction of differentiation Plac8 associates with C/EBPβ and binds to the C/EBPβ promoter to induce its transcription. Thus, Plac8 is a critical upstream regulator of brown fat differentiation and function that acts, at least in part, by inducing C/EBPβ expression.