Congenital generalized lipodystrophy type 2 (CGL2) is caused by mutations in the gene, which encodes the protein seipin. However, how seipin loss causes adipose tissue failure remains unclear. Using human adipocyte progenitor cells capable of robust differentiation in vitro and in vivo, we reveal two unexpected findings that redefine CGL2 pathogenesis. First, seipin is dispensable for lipid droplet biogenesis but essential for recruiting the major adipocyte scaffold protein Perilipin 1 (PLIN1) to the lipid droplet surface. Second, we discover that the integrity of the lipid droplet serves as an organelle to nucleus quality control checkpoint enforcing adipocyte identity. Without seipin-dependent PLIN1 recruitment, adipocytes exhibit enhanced lipolysis and ceramide accumulation, triggering an unexpected cellular response of de-differentiation into a progenitor-like state. From this de-differentiated state, cells can undergo additional cycles of differentiation and de-differentiation upon repeated adipogenic stimuli. However, some cells escape de-differentiation, instead forming a single large droplet and displaying severe cellular structural abnormalities. Consistent with this model, we find functional adipose tissue can form in vivo from seipin-deficient cells, yet ultimately fails. These findings resolve conflicting models of CGL2 pathogenesis by reframing seipin as a regulator of PLIN1 recruitment, rather than droplet formation per se, and reveal the fundamental role of lipid droplet integrity in the development of functional human adipocytes.