Nocturnin (NOC) is a circadian-regulated protein related to the yeast family of transcription factors involved in the cellular response to nutrient status. In mammals, NOC functions as a deadenylase but lacks a transcriptional activation domain. It is highly expressed in bone-marrow stromal cells (BMSCs), hepatocytes, and adipocytes. In BMSCs exposed to the PPAR-gamma (peroxisome proliferator-activated receptor-gamma) agonist rosiglitazone, Noc expression was enhanced 30-fold. Previously, we reported that Noc(-/-) mice had low body temperature, were protected from diet-induced obesity, and most importantly exhibited absence of Pparg circadian rhythmicity on a high-fat diet. Consistent with its role in influencing BMSCs allocation, Noc(-/-) mice have reduced bone marrow adiposity and high bone mass. In that same vein, NOC overexpression enhances adipogenesis in 3T3-L1 cells but negatively regulates osteogenesis in MC3T3-E1 cells. NOC and a mutated form, which lacks deadenylase activity, bind to PPAR-gamma and markedly enhance PPAR-gamma transcriptional activity. Both WT and mutant NOC facilitate nuclear translocation of PPAR-gamma. Importantly, NOC-mediated nuclear translocation of PPAR-gamma is blocked by a short peptide fragment of NOC that inhibits its physical interaction with PPAR-gamma. The inhibitory effect of this NOC-peptide was partially reversed by rosiglitazone, suggesting that effect of NOC on PPAR-gamma nuclear translocation may be independent of ligand-mediated PPAR-gamma activation. In sum, Noc plays a unique role in the regulation of mesenchymal stem-cell lineage allocation by modulating PPAR-gamma activity through nuclear translocation. These data illustrate a unique mechanism whereby a nutrient-responsive gene influences BMSCs differentiation, adipogenesis, and ultimately body composition.