The yellow mouse obesity syndrome is due to dominant mutations at the Agouti locus, which is characterized by obesity, hyperinsulinemia, insulin resistance, hyperglycemia, hyperleptinemia, increased linear growth, and yellow coat color. This syndrome is caused by ectopic expression of Agouti in multiple tissues. Mechanisms of Agouti action in obesity seem to involve, at least in part, competitive melanocortin antagonism. Both central and peripheral effects have been implicated in Agouti‐induced obesity. An Agouti‐Related Protein (AGRP) has been described recently. It has been shown to be expressed in mice hypothalamus and to act similarly to agouti as a potent antagonist to central melanocortin receptor MC4‐R, suggesting that AGRP is an endogenous MC4‐R ligand. Mice lacking MC4‐R become hyperphagic and develop obesity, implying that agouti may lead to obesity by interfering with MC4‐R signaling in the brain and consequently regulating food intake. Furthermore, food intake is inhibited by intracerebro‐ventricular injection of a potent melanocortin agonist and was reversed by administration of an MC4‐R antagonist. The direct cellular actions of Agouti include stimulation of fatty acid and triglyceride synthesis via a Ca²⁺‐dependent mechanism. Agouti and insulin act in an additive manner to increase lipogenesis. This additive effect of agouti and insulin is demonstrated by the necessity of insulin in eliciting weight gain in transgenic mice expressing agouti specifically in adipose tissue. This suggests that agouti expression in adipose tissue combined with hyperinsulinemia may lead to increased adiposity. The roles of melanocortin receptors or agouti‐specific receptor(s) in agouti regulation of adipocyte metabolism and other peripheral effects remain to be determined. In conclusion, both central and peripheral actions of agouti contribute to the yellow mouse obesity syndrome and this action is mediated at least in part by antagonism with melanocortin receptors and/or regulation of intracellular calcium.