Accumulating evidence suggests that brown adipose tissue (BAT) is a potential therapeutic target for managing obesity and related diseases. PGAM family member 5, mitochondrial serine/threonine protein phosphatase (PGAM5), is a protein phosphatase that resides in the mitochondria and regulates many biological processes, including cell death, mitophagy, and immune responses. Because BAT is a mitochondria-rich tissue, we have hypothesized that PGAM5 has a physiological function in BAT. We previously reported that PGAM5-knockout (KO) mice are resistant to severe metabolic stress. Importantly, lipid accumulation is suppressed in PGAM5-KO BAT, even under unstressed conditions, raising the possibility that PGAM5 deficiency stimulates lipid consumption. However, the mechanism underlying this observation is undetermined. Here, using an array of biochemical approaches, including quantitative RT-PCR, immunoblotting, and oxygen consumption assays, we show that PGAM5 negatively regulates energy expenditure in brown adipocytes. We found that PGAM5-KO brown adipocytes have an enhanced oxygen consumption rate and increased expression of uncoupling protein 1 (UCP1), a protein that increases energy consumption in the mitochondria. Mechanistically, we found that PGAM5 phosphatase activity and intramembrane cleavage are required for suppression of UCP1 activity. Furthermore, utilizing a genome-wide siRNA screen in HeLa cells to search for regulators of PGAM5 cleavage, we identified a set of candidate genes, including phosphatidylserine decarboxylase (PISD), which catalyzes the formation of phosphatidylethanolamine at the mitochondrial membrane. Taken together, these results indicate that PGAM5 suppresses mitochondrial energy expenditure by down-regulating UCP1 expression in brown adipocytes and that its phosphatase activity and intramembrane cleavage are required for UCP1 suppression.