We examined mouse models with altered adipocyte expression of mitoNEET, a protein residing in the mitochondrial outer membrane, to probe its impact on mitochondrial function and subsequent cellular responses. We found that overexpression of mitoNEET enhances lipid uptake and storage, leading to an expansion of the mass of adipose tissue. Despite the resulting massive obesity, benign aspects of adipose tissue expansion prevail, and insulin sensitivity is preserved. Mechanistically, we also found that mitoNEET inhibits mitochondrial iron transport into the matrix and, because iron is a rate-limiting component for electron transport, lowers the rate of β-oxidation. This effect is associated with a lower mitochondrial membrane potential and lower levels of reactive oxygen species–induced damage, along with increased production of adiponectin. Conversely, a reduction in mitoNEET expression enhances mitochondrial respiratory capacity through enhanced iron content in the matrix, ultimately corresponding to less weight gain on a high-fat diet. However, this reduction in mitoNEET expression also causes heightened oxidative stress and glucose intolerance. Thus, manipulation of mitochondrial function by varying mitoNEET expression markedly affects the dynamics of cellular and whole-body lipid homeostasis.