Brown adipose tissue (BAT) dissipates chemical energy in the form of heat as a defence against hypothermia and obesity. Current evidence indicates that brown adipocytes arise from Myf5⁺ dermotomal precursors through the action of PR domain containing protein 16 (PRDM16) transcriptional complex^,. However, the enzymatic component of the molecular switch that determines lineage specification of brown adipocytes remains unknown. Here we show that euchromatic histone-lysine N-methyltransferase 1 (EHMT1) is an essential BAT-enriched lysine methyltransferase in the PRDM16 transcriptional complex and controls brown adipose cell fate. Loss of EHMT1 in brown adipocytes causes a severe loss of brown fat characteristics and induces muscle differentiation in vivo through demethylation of histone 3 lysine 9 (H3K9me2 and 3) of the muscle-selective gene promoters. Conversely, EHMT1 expression positively regulates the BAT-selective thermogenic program by stabilizing the PRDM16 protein. Notably, adipose-specific deletion of EHMT1 leads to a marked reduction of BAT-mediated adaptive thermogenesis, obesity and systemic insulin resistance. These data indicate that EHMT1 is an essential enzymatic switch that controls brown adipose cell fate and energy homeostasis.