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Background: Obesity is a widespread disease and is caused mainly by excessive adipocyte differentiation and fat accumulation. Peroxisome proliferation-activated receptor γ (PPARγ) and CCAAT/enhancer-binding proteins (C/EBP) are major components for regulating adipocyte differentiation. Uncoupling protein 1 (UCP1) is a transmembrane protein that can convert white fat to brown adipose tissue. Artemisia annua L. has long been used in East Asia as an herbal drug for anti-oxidant, anti-bacterial, and anti-obesity purposes. Methods: We investigated the effects of water extracts of A. annua (WEAA) in C3H10T1/2, a mesenchymal stem cell line, by measuring the level of intracellular fat accumulation and the expression of genes associated with adipocyte differentiation. We also evaluated anti-obesity effects of WEAA in Zucker rats, a genetic model for the study of obesity, and in Sprague Dawley rats with high-fat diet (HFD)-induced obesity. Results: In this study, WEAA reduced the expression levels of PPARγ and C/EBPa in C3H10T1/2 cells, as well as the expression of enzymes that regulate fatty acid metabolism. In the Zucker fatty rat model and the HFD-induced obesity rat model, WEAA significantly decreased adipogenic differentiation and white fat accumulation between the scapulae, in contrast to the brown fat that remained unchanged between the groups. A. annua suppressed the expression of the adipocyte differentiation-promoting genes, while increasing the expression of UCP1. Conclusion: These results indicated that WEAA could reduce adipocyte differentiation and fat accumulation in in vitro and in vivo model systems, resulting in suppression of obesity and the occurrence of fatty liver due to a HFD [ABSTRACT FROM AUTHOR]