In obesity, rapidly expanding adipose tissue becomes hypoxic, precipitating inflammation, fibrosis, and insulin resistance. Compensatory angiogenesis may prevent these events. Mice lacking the intracellular glucocorticoid-amplifying enzyme 11 beta-hydroxysteroid dehydrogenase type 1 (11 beta HSD1(-/-)) have "healthier" adipose tissue distribution and resist metabolic disease with diet-induced obesity. Here we show that adipose tissues of 11 beta HSD1(-/-) mice exhibit attenuated hypoxia, induction of hypoxia-inducible factor (HIF-1 alpha) activation of the TGF beta/Smad3/alpha-smooth muscle actin (alpha-SMA) signaling pathway, and fibrogenesis despite similar fat accretion with diet-induced obesity. Moreover, augmented 11 beta HSD1(-/-) adipose tissue angiogenesis is associated with enhanced peroxisome proliferator-activated receptor gamma (PPAR gamma)-inducible expression of the potent angiogenic factors VEGF-A, apelin, and angiopoietin-like protein 4. Improved adipose angiogenesis and reduced fibrosis provide a novel mechanism whereby suppression of intracellular glucocorticoid regeneration promotes safer fat expansion with weight gain.