Thyroid-associated ophthalmopathy, a process in which the orbital tissues become inflamed and are remodeled, occurs with a variable presentation. In some patients, eye muscle enlargement predominates. In others, the connective/adipose tissue enlargement appears the more significant problem. Orbital fibroblasts exhibit heterogeneous phenotypes in culture. Here we report that fibroblasts derived from the connective/adipose tissue depot are distinct from those investing the extraocular muscles. Connective tissue fibroblasts represent a bimodal population of cells with regard to the surface display of the glycoprotein, Thy-1. Perimysial fibroblasts in contrast express Thy-1 uniformly. In that regard, they resemble those from the skin. When subjected to a newly defined set of culture conditions, adipocyte differentiation occurs in up to 43% of the cells. All adipocytes examined failed to display Thy-1. Fibroblasts derived from perimysium and dermis uniformly do not differentiate into adipocytes when incubated under identical culture conditions. Both Thy-1(+) and Thy-1(-) connective tissue fibroblasts express the adipogenic trigger, peroxisome proliferator activator gamma, suggesting that differences in the potential for differentiation may reside with phenotypic attributes downstream from this receptor/adipogenic transcription factor. These observations enhance our understanding of orbital adipogenesis and define previously unrecognized differences between fibroblasts from the extraocular muscle and connective tissue.