Adipose thermogenesis is repressed in obesity, reducing the homeostatic capacity to compensate for chronic overnutrition. Inflammation inhibits adipose thermogenesis, but little is known about how this occurs. Here we showed that the innate immune transcription factor IRF3 is a strong repressor of thermogenic gene expression and oxygen consumption in adipocytes. IRF3 achieved this by driving expression of the ubiquitin-like modifier ISG15, which became covalently attached to glycolytic enzymes, thus reducing their function and decreasing lactate production. Lactate repletion was able to restore thermogenic gene expression, even when the IRF3/ISG15 axis was activated. Mice lacking ISG15 phenocopied mice lacking IRF3 in adipocytes, as both had elevated energy expenditure and were resistant to diet-induced obesity. These studies provide a deep mechanistic understanding of how the chronic inflammatory milieu of adipose tissue in obesity prevents thermogenic compensation for overnutrition.