Globally, the prevalence of obesity is escalating, and insulin resistance resulting from increased (predominantly visceral) adipose tissue mass has been identified as a key factor that could drive parallel rises in type 2 diabetes mellitus (T2DM) prevalence. Correlations between these global epidemics have encouraged investigation into potential molecular links between the related impairments in lipid and glucose homeostasis. This article reviews factors released from adipose tissue that could contribute to the development of insulin resistance and beta-cell dysfunction, including tumour necrosis factor alpha (TNF-alpha), free fatty acids (FFAs), adiponectin, resistin and leptin. It also considers whether agonists of the peroxisome proliferator-activated receptor gamma, which is abundant in adipose tissue, might have an important impact on factors associated with adipocyte metabolism. For example, the thiazolidinediones, a class of oral anti-diabetic agents that reduce insulin resistance and improve beta-cell function, might mediate these effects by regulating adipocyte-derived factors, in particular TNF-alpha and FFAs.