FUS-DDIT3 is a chimeric oncogene generated by the most common chromosomal translocation t(12;16)(q13;p11) associated to liposarcomas. The application of transgenic methods and the use of primary mesenchymal progenitor cells to the study of this sarcoma-associated FUS-DDIT3 gene fusion have provided insights into their in vivo functions and suggested mechanisms by which lineage selection may be achieved. These studies indicate that FUS-DDIT3 contributes to differentiation arrest acting at a point in the adipocyte differentiation process after induction of peroxisome proliferator-activated receptor gamma (PPARgamma) expression. To test this idea within a living mouse, we generated mice expressing FUS-DDIT3 within aP2-positive cells, because aP2 is a downstream target of PPARgamma expressed at the immature adipocyte stage. Here, we report that FUS-DDIT3 expression was successfully induced at the aP2 stage of differentiation both in vivo and in vitro. aP2-FUS-DDIT3 mice do not develop liposarcomas and exhibit an increase in white adipose tissue size. Consistent with in vivo data, mouse embryonic fibroblasts (MEFs) obtained from aP2-FUS-DDIT3 mice not only were capable of terminal differentiation but also showed an increased capacity for adipogenesis in vitro compared with wild-type MEFs. Taken together, this study provides genetic evidence that the presence of FUS-DDIT3 in an aP2-positive cell is not enough to cause liposarcoma development and establishes that PPARgamma inactivation is required for liposarcoma development.