Visceral obesity is associated with insulin resistance and higher risk of type 2 diabetes and metabolic diseases. A limited ability of adipose tissues to remodel through the recruitment and differentiation of adipose stem cells (ASCs) is associated with adipose tissue inflammation and fibrosis and the metabolic syndrome. We show that the lower adipogenesis of omental (Om) compared with abdominal subcutaneous (Abdsc) ASCs was associated with greater secretion of TGFb ligands that acted in an autocrine/paracrine loop to activate SMAD2 and suppress adipogenesis. Inhibition of TGFb signaling rescued Om ASC differentiation. In Abdsc ASCs, low concentrations of dexamethasone suppressed TGFb signaling and enhanced adipogenesis, at least in part by increasing TGFBR3 protein that can sequester TGFb ligands. Om ASCs were resistant to these dexamethasone effects; recombinant TGFBR3 increased their differentiation. Pericellular fibrosis, a hallmark of dysfunctional adipose tissue, was greater in Om and correlated with higher level of tissue TGFb signaling activity and lower ASC differentiation. We conclude that glucocorticoids restrain cell-autonomous TGFb signaling in ASCs to facilitate adipogenesis and healthy remodeling in Abdsc and these processes are impaired in Om. Therapies directed at overcoming glucocorticoid resistance in visceral adipose tissue may improve remodeling and help prevent metabolic complications of visceral obesity.