It is widely accepted that increasing adiposity is associated with insulin resistance and increased risk of type 2 diabetes. The predominant paradigm used to explain this link is the portal/visceral hypothesis. This hypothesis proposes that increased adiposity, particularly in the visceral depots, leads to increased free fatty acid flux and inhibition of insulin action via Randle's effect in insulin-sensitive tissues. Recent data do not entirely support this hypothesis. As such, two new paradigms have emerged that may explain the established links between adiposity and disease. (A) Three lines of evidence support the ectopic fat storage syndrome. First, failure to develop adequate adipose tissue mass in either mice or humans, also known as lipodystrophy, results in severe insulin resistance and diabetes. This is thought to be the result of ectopic storage of lipid into liver, skeletal muscle, and the pancreatic insulin-secreting beta cell. Second, most obese patients also shunt lipid into the skeletal muscle, the liver, and probably the beta cell. The importance of this finding is exemplified by several studies demonstrating that the degree of lipid infiltration into skeletal muscle and liver correlates highly with insulin resistance. Third, increased fat cell size is highly associated with insulin resistance and the development of diabetes. Increased fat cell size may represent the failure of the adipose tissue mass to expand and thus to accommodate an increased energy influx. Taken together, these three observations support the acquired lipodystrophy hypothesis as a link between adiposity and insulin resistance. (B) The endocrine paradigm developed in parallel with the ectopic fat storage syndrome hypothesis. Adipose tissue secretes a variety of endocrine hormones, such as leptin, interleukin-6, angiotensin II, adiponectin (also called ACRP30 and adipoQ), and resistin. From this viewpoint, adipose tissue plays a critical role as an endocrine gland, secreting numerous factors with potent effects on the metabolism of distant tissues. These two new paradigms provide a framework to advance our understanding of the pathophysiology of the insulin-resistance syndrome.