Obesity is characterized by an expanded adipose tissue mass and reversing obesity reduces the risk of insulin resistance and cardiovascular disease. Ciliary neurotrophic factor (CNTF) reverses obesity by promoting the preferential loss of white adipose tissue. We evaluated the cellular and molecular mechanisms by which CNTF regulates adiposity. Obese mice fed a high fat diet were treated with saline (HFD) or recombinant CNTF for 10 days and adipose tissue was removed for analysis. Another group fed a HFD were pair fed (PF) to CNTF mice. In separate experiments 3T3-L1 adipocytes were treated with CNTF to examine metabolic responses and signaling. CNTF reduced adipose mass that resulted from reductions in adipocyte area and triglyceride content. CNTF treatment did not affect lipolysis but resulted in decreases in fat esterification and lipogenesis and enhanced fatty acid oxidation. The enhanced fat oxidation was associated with the expression of peroxisome proliferator–activated receptor coactivator1 (PGC1) and nuclear respiratory factor 1, increases in oxidative phosphorylation subunits and mitochondrial biogenesis as determined by electron microscopy. Studies in cultured adipocytes revealed that CNTF activates p38 mitogen activated protein kinase and AMP activated protein kinase (AMPK). Inhibiting p38 activation prevented the CNTF-induced increase in PGC1 but not AMPK activation. Diminished food intake with PF induced similar decreases in fat mass but this was related to increased expression of uncoupling protein 1. We conclude that CNTF re-programs adipose tissue to promote mitochondrial biogenesis, enhancing oxidative capacity and reducing lipogenic capacity, thereby resulting in triglyceride loss.