The human disease lipoatrophic (or lipodystrophic) diabetes is a rare syndrome in which a deficiency of adipose tissue is associated with Type 2 diabetes. This disease is an interesting contrast to the usual situation in which diabetes is associated with obesity, an excess of fat. Aside from obesity, patients with lipodystrophic diabetes have the other features associated with Metabolic Syndrome X, including hypertension and dyslipidemia. The contrast between diabetes with a lack of fat and diabetes with an excess of fat provides an opportunity to study the mechanisms causing Type 2 diabetes and its complications. Recently, three laboratories have produced transgenic mice that are deficient in white adipose tissue. These mice have insulin resistance and other features of lipoatrophic diabetes, and are a faithful model for the human disease. Here we review the different murine models of fat ablation and compare the murine and human diseases, addressing the questions: Is the lack of fat causative of the diabetes, and if so by what mechanism? How could the other clinical features be explained mechanistically? And finally, what can be gleaned about insight into treatment options?