Glucocorticoids rapidly and robustly induce cell fate decisions in various multipotent cells, although the precise mechanisms of these important cellular events are not understood. Here we showed that glucocorticoids repressed Per3 expression and that this repression was critical for advancing mesenchymal stem cells to the adipocyte fate. Exogenous expression of Per3 inhibited adipogenesis, whereas knocking out Per3 enhanced that fate. Moreover, we found that PER3 formed a complex with PPARγ and inhibited PPARγ-mediated transcriptional activation via Pparγ response elements. Consistent with these findings, Per3 knock-out mice displayed alterations in body composition, with both increased adipose and decreased muscle tissue compared with wild-type mice. Our findings identify Per3 as potent mediator of cell fate that functions by altering the transcriptional activity of PPARγ.