The prevalence of obesity has been increasing at a rapid rate over the last few decades. Although the primary defect can be attributed to an imbalance of energy intake over energy expenditure, the regulation of energy balance is now recognized to be complex. Adipose-tissue factors play a central role in the control of energy balance and whole-body fuel homoeostasis. The regulation of adipose-tissue function, in particular its secretion of adipokines, is impaired by increases in adipose mass associated with obesity, and with the development of insulin resistance and Type 2 diabetes. This review analyses adipose-regulated energy input and expenditure, together with the impact of dietary macronutrient composition on energy balance in relation to susceptibility to the development of obesity and Type 2 diabetes, and how these metabolic conditions may be exacerbated by the consequences of abnormal adipose function. By gaining a greater understanding of how energy balance is controlled in normal, and in obese and diabetic states, a more practical approach can be employed to prevent and better treat obesity and metabolic disorders.