Lipin 1 is a bifunctional protein that regulates gene transcription and, as a Mg(2+)-dependent phosphatidic acid phosphatase (PAP), is a key enzyme in the biosynthesis of phospholipids and triacylglycerol. We describe here the functional interaction between lipin 1 and the nuclear factor of activated T cells c4 (NFATc4). Lipin 1 represses NFATc4 transcriptional activity through protein-protein interaction, and lipin 1 is present at the promoters of NFATc4 transcriptional targets in vivo. Catalytically active and inactive lipin 1 can suppress NFATc4 transcriptional activity, and this suppression may involve recruitment of histone deacetylases to target promoters. In fat pads from mice deficient for lipin 1 (fld mice) and in 3T3-L1 adipocytes depleted of lipin 1 there is increased expression of several NFAT target genes including tumor necrosis factor alpha, resistin, FABP4, and PPARgamma. Finally, both lipin 1 protein and total PAP activity are decreased with increasing adiposity in the visceral, but not subcutaneous, fat pads of ob/ob mice. These observations place lipin 1 as a potentially important link between triacylglycerol synthesis and adipose tissue inflammation.