The KDM5 family of histone demethylases removes the H3K4 tri-methylation (H3K4me3) mark frequently found at promoter regions of actively transcribed genes and is therefore generally considered to contribute to corepression. In this study, we show that knockdown (KD) of all expressed members of the KDM5 family in white and brown preadipocytes leads to deregulated gene expression and blocks differentiation to mature adipocytes. KDM5 KD leads to a considerable increase in H3K4me3 at promoter regions; however, these changes in H3K4me3 have a limited effect on gene expression per se. By contrast, genome-wide analyses demonstrate that KDM5A is strongly enriched at KDM5-activated promoters, which generally have high levels of H3K4me3 and are associated with highly expressed genes. We show that KDM5-activated genes include a large set of cell cycle regulators and that the KDM5s are necessary for mitotic clonal expansion in 3T3-L1 cells, indicating that KDM5 KD may interfere with differentiation in part by impairing proliferation. Notably, the demethylase activity of KDM5A is required for activation of at least a subset of pro-proliferative cell cycle genes. In conclusion, the KDM5 family acts as dual modulators of gene expression in preadipocytes and is required for early stage differentiation and activation of pro-proliferative cell cycle genes.