The adipose tissue inflammation accompanying obesity has important consequences for adipocyte lipid metabolism, and increased adipose tissue TNF plays an important role for mediating the effect of inflammation on adipocyte function. Recent studies have shown that apolipoprotein E is highly expressed in adipose tissue where it plays an important role in modulating adipocyte triglyceride metabolism, triglyceride mass, and adipocyte size. We have previously reported that TNF reduces adipocyte apoE and the current studies were undertaken to evaluate the molecular mechanism for this regulation. TNF repression of adipocyte apoE gene expression required an intact NFB binding site at -43 in the apoE promoter. Site-directed mutagenesis at this site completely eliminated TNF regulation of an apoE gene reporter. TNF treatment activated binding of NFB p50, isolated from adipocyte nuclei, to the apoE promoter. Two structurally distinct inhibitors of NFB complex activation or translocation abrogated the TNF effect on the apoE gene. Using chromatin immunoprecipitation assays, we demonstrated that treatment of adipocytes with TNF led to increased binding of NFB p50, and decreased binding of p65 and Sp1, to this region of the apoE promoter in living cells. The key role played by increased p50 binding was confirmed by p50 knockdown experiments. Reduction of p50 expression using siRNA completely eliminated TNF-mediated reduction of endogenous adipocyte apoE gene expression. These results establish the molecular link between adipose tissue inflammation and apoE gene expression in adipocytes. The suppression of adipocyte apoE by the pro-inflammatory adipose tissue milieu associated with obesity will have important downstream effects on adipocyte triglyceride turnover and content.