Increasing obesity is a major global health concern while at the same time iron-deficiency anemia remains common worldwide. Although these two conditions represent opposite ends of the spectrum of over- and under-nutrition, they appear to be linked: overweight individuals are at higher risk of iron deficiency than normal-weight individuals. Potential explanations for this association include dilutional hypoferremia, poor dietary iron intake, increased iron requirements, and/or impaired iron absorption in obese individuals. Recent evidence suggests obesity-related inflammation may play a central role through its regulation of hepcidin. Hepcidin levels are higher in obese individuals and are linked to subclinical inflammation; this may reduce iron absorption and blunt the effects of iron fortification. Thus, low iron status in overweight individuals may result from a combination of nutritional (reduced absorption) and functional (increased sequestration) iron deficiency. In this review, we focus on subclinical inflammation in obesity, and its effect on hepcidin levels, as the most plausible explanation for the link between iron deficiency and obesity.