Sterol regulatory element binding proteins (SREBPs) are transcription factors that activate transcription of the genes involved in cholesterol and fatty acid biosynthesis. In the present study, we show that a small synthetic molecule we previously discovered to block adipogenesis is an inhibitor of the SREBP activation. The diarylthiazole derivative, now called fatostatin, impairs the activation process of SREBPs, thereby decreasing the transcription of lipogenic genes in cells. Our analysis suggests that fatostatin inhibits the ER-Golgi translocation of SREBPs through binding to their escort protein, the SREBP cleavage-activating protein (SCAP), at a distinct site from the sterol-binding domain. Fatostatin blocked increases in body weight, blood glucose, and hepatic fat accumulation in obese ob/ob mice, even under uncontrolled food intake. Fatostatin may serve as a tool for gaining further insights into the regulation of SREBP.