Adiponectin is an important adipocytokine that improves insulin action and reduces atherosclerotic processes. The plasma adiponectin level is paradoxically reduced in obese individuals, but the underlying mechanism is unknown. This study was undertaken to test the hypothesis that mitochondrial function is linked to adiponectin synthesis in adipocytes. We examined the effects of rosiglitazone and the measures that increase or decrease mitochondrial function on adiponectin synthesis. We also examined the molecular mechanism by which changes in mitochondrial function affect adiponectin synthesis. Adiponectin expression and mitochondrial content in adipose tissue were reduced in obese db/db mice, and these changes were reversed by the administration of rosiglitazone. In cultured adipocytes, induction of increased mitochondrial biogenesis (via adenoviral overexpression of nuclear respiratory factor-1) increased adiponectin synthesis, whereas impairment in mitochondrial function decreased it. Impaired mitochondrial function increased endoplasmic reticulum (ER) stress, and agents causing mitochondrial or ER stress reduced adiponectin transcription via activation of c-Jun NH(2)-terminal kinase (JNK) and consequent induction of activating transcription factor (ATF)3. Increased mitochondrial biogenesis reversed all of these changes. Mitochondrial function is linked to adiponectin synthesis in adipocytes, and mitochondrial dysfunction in adipose tissue may explain decreased plasma adiponectin levels in obesity. Impaired mitochondrial function activates a series of mechanisms involving ER stress, JNK, and ATF3 to decrease adiponectin synthesis.