PPARγ2 is a critical lineage-determining transcription factor that is essential for adipogenic differentiation. Here we report characterization of the three-dimensional structure of the PPARγ2 locus after the onset of adipogenic differentiation and the mechanisms by which it forms. We identified a differentiation-dependent loop between the PPARγ2 promoter and an enhancer sequence 10 kb upstream that forms at the onset of PPARγ2 expression. The arginine methyltransferase Prmt5 was required for loop formation, and overexpression of Prmt5 resulted in premature loop formation and earlier onset of PPARγ2 expression. Kinetic studies of regulatory factor interactions at the PPARγ2 promoter and enhancer revealed enhanced interaction of Prmt5 with the promoter that preceded stable association of Prmt5 with enhancer sequences. Prmt5 knockdown prevented binding of both MED1, a subunit of Mediator complex that facilitates enhancer-promoter interactions, and Brg1, the ATPase of the mammalian SWI/SNF chromatin remodeling enzyme required for PPARγ2 activation and adipogenic differentiation. The data indicate a dynamic association of Prmt5 with the regulatory sequences of the PPARγ2 gene that facilitates differentiation-dependent, three-dimensional organization of the locus. In addition, other differentiation-specific, long-range chromatin interactions showed Prmt5-dependence, indicating a more general role for Prmt5 in mediating higher-order chromatin connections in differentiating adipocytes.