Diabetic dyslipidemia is a cluster of plasma lipid and lipoprotein abnormalities that are metabolically interrelated. The recognition that the elevation of large VLDL 1 particles initiates a sequence of events that leads to the formation of small dense LDL and HDL species has focused the assembly of VLDL particles on the spotlight as a potential culprit of dyslipidemia. Notably dyslipidemia is associated with insulin resistance, visceral obesity and liver fat content. Insulin resistance is associated with excessive flux of substrates for VLDL assembly to the liver as well as the upregulation of the machinery generating large VLDL particles in excess. The regulation of different molecular steps in this cascade of events are complex and so far poorly understood. The disordered crosstalk between adipose tissue and the liver results in an imbalance of the machinery that orchestrates the regulation of VLDL production. A number of studies indicates that adipocytokines in particular adiponectin may be a seminal player in the regulation of fat metabolism in the liver. Future discoveries hopefully will delineate the regulatory steps to allow more targeted treatment of diabetic dyslipidemia.