Brown and beige adipocytes are specialized cells that express uncoupling protein 1 (UCP1) and dissipate chemical energy as heat. These cells likely possess alternative UCP1-independent thermogenic mechanisms. Here, we identify a secreted enzyme, peptidase M20 domain containing 1 (PM20D1), that is enriched in UCP1(+) versus UCP1(-) adipocytes. We demonstrate that PM20D1 is a bidirectional enzyme in vitro, catalyzing both the condensation of fatty acids and amino acids to generate N-acyl amino acids and also the reverse hydrolytic reaction. N-acyl amino acids directly bind mitochondria and function as endogenous uncouplers of UCP1-independent respiration. Mice with increased circulating PM20D1 have augmented respiration and increased N-acyl amino acids in blood. Lastly, administration of N-acyl amino acids to mice improves glucose homeostasis and increases energy expenditure. These data identify an enzymatic node and a family of metabolites that regulate energy homeostasis. This pathway might be useful for treating obesity and associated disorders.