Adipose progenitor cells (APCs) reside in a vascular niche, located within the perivascular compartment of adipose tissue blood vessels. Yet, the signals and mechanisms that govern adipose vascular niche formation and APC niche interaction are unknown. Here we show that the assembly and maintenance of the adipose vascular niche is controlled by PPARγ acting within APCs. PPARγ triggers a molecular hierarchy that induces vascular sprouting, APC vessel niche affinity and APC vessel occupancy. Mechanistically, PPARγ transcriptionally activates PDGFRβ and VEGF. APC expression and activation of PDGFRβ promotes the recruitment and retention of APCs to the niche. Pharmacologically, targeting PDGFRβ disrupts APC niche contact thus blocking adipose tissue expansion. Moreover, enhanced APC expression of VEGF stimulates endothelial cell proliferation and expands the adipose niche. Consequently, APC niche communication and retention are boosted by VEGF thereby impairing adipogenesis. Our data indicate that APCs direct adipose tissue niche expansion via a PPARγ-initiated PDGFRβ and VEGF transcriptional axis.