Orexin (OX) neuropeptides stimulate feeding and arousal. Deficiency of orexin is implicated in narcolepsy, a disease associated with obesity, paradoxically in the face of reduced food intake. Here, we show that obesity in orexin-null mice is associated with impaired brown adipose tissue (BAT) thermogenesis. Failure of thermogenesis in OX-null mice is due to inability of brown preadipocytes to differentiate. The differentiation defect in OX-null neonates is circumvented by OX injections to OX-null dams. In vitro, OX, triggers the full differentiation program in mesenchymal progenitor stem cells, embryonic fibroblasts and brown preadipocytes via p38 mitogen activated protein (MAP) kinase and bone morphogenetic protein receptor-1a (BMPR1A)-dependent Smad1/5 signaling. Our study suggests that obesity associated with OX depletion is linked to brown-fat hypoactivity, which leads to dampening of energy expenditure. Thus, orexin plays an integral role in adaptive thermogenesis and body weight regulation via effects on BAT differentiation and function.