Obesity and diabetes-related kidney diseases associate with renal failure and cardiovascular morbidity, and represent a major health issue worldwide. However, the molecular mechanisms leading to their development remain poorly understood. We observed increased expression of transcription factor FoxC2 in the podocytes of obese Zucker rats that are insulin resistant and albuminuric. We also found that depletion of adiponectin, an adipocyte-derived hormone whose secretion is decreased in obesity, upregulated FOXC2 in differentiated human podocytes in vitro. Overexpression of FOXC2 in cultured human podocytes led to increased nuclear expression of FOXC2 associated with a change of cellular morphology. This was accompanied by upregulation of vimentin, a key mesenchymal marker, and active beta-catenin, associated with podocyte injury. We also observed re-organization of the actin cytoskeleton, disrupted localization of the tight junction protein ZO-1, and increased motility of podocytes overexpressing FOXC2. These data indicate that the expression of FOXC2 in podocytes needs to be tightly regulated, and that its overexpression induces a chain of cellular events leading to podocyte dysfunction. These changes may lead to podocyte detachment and depletion ultimately contributing to albuminuria. We also suggest a novel molecular mechanism linking obesity-induced decrease in adiponectin to podocyte dysfunction via upregulation of FOXC2.