The recently discovered uncoupling protein 3 (UCP3) is highly homologous to the mitochondrial inner membrane protein UCP1, which generates heat by uncoupling the respiratory chain from oxidative phosphorylation. The thermogenic function of UCP1 protects against cold and regulates the energy balance in rodents. We review in vitro studies investigating the uncoupling activity of UCP3 and in vivo studies, which address UCP3 gene expression in brown adipose tissue and skeletal muscle under various metabolic conditions. The data presented are, for the most, consistent with an uncoupling role for UCP3 in regulatory thermogenesis. We also discuss mediators of UCP3 regulation and propose a potential role for intracellular fatty acids in the mechanism of UCP3 modulation. Finally, we hypothesize a role for UCP3 in the metabolic adaptation of the mitochondria to the degradation of fatty acids.