Over the past two decades increases in obesity, due to high caloric intakes and immobilizing technologies, has led to a surge in type 2 diabetes. In obesity elevated circulating fatty acids set-off a pro-inflammatory cascade that increases the production of tumour necrosis factor-alpha(TNFalpha) from macrophages. Obesity is associated with blunted skeletal muscle fatty acid oxidation, accumulation of bioactive lipids and insulin resistance. The factors contributing to defects in fatty acid metabolism are not understood but new data demonstrates that increased TNFalpha in obesity increases protein phosphatase 2C (PP2C), which in turn suppresses the activity of AMP-activated protein kinase (AMPK), a critical regulator of energy metabolism.(1) These data identify a novel mechanism by which inflammation in obesity is a precursor to defects in skeletal muscle fatty acid oxidation that generates a vicious cycle exacerbating the development of insulin resistance.