Body temperature homoeostasis in mammals is governed centrally through the regulation of shivering and non-shivering thermogenesis and cutaneous vasomotion. Non-shivering thermogenesis in brown adipose tissue (BAT) is mediated by sympathetic activation, followed by PGC-1α induction, which drives UCP1. Here we identify nardilysin (Nrd1 and NRDc) as a critical regulator of body temperature homoeostasis. Nrd1^−/− mice show increased energy expenditure owing to enhanced BAT thermogenesis and hyperactivity. Despite these findings, Nrd1^−/− mice show hypothermia and cold intolerance that are attributed to the lowered set point of body temperature, poor insulation and impaired cold-induced thermogenesis. Induction of β3-adrenergic receptor, PGC-1α and UCP1 in response to cold is severely impaired in the absence of NRDc. At the molecular level, NRDc and PGC-1α interact and co-localize at the UCP1 enhancer, where NRDc represses PGC-1α activity. These findings reveal a novel nuclear function of NRDc and provide important insights into the mechanism of thermoregulation.