Fatty acids released from white adipose tissue (WAT) provide important energy substrates during fasting. However, uncontrolled fatty acid release from WAT during non-fasting states causes lipotoxicity and promotes inflammation and insulin resistance, which can lead to and worsen type 2 diabetes (DM2). WAT is also a source for insulin sensitizing fatty acids such as palmitoleate produced during de novo lipogenesis. Insulin and leptin are two major hormonal adiposity signals that control energy homeostasis through signaling in the central nervous system. Both hormones have been implicated to regulate both WAT lipolysis and de novo lipogenesis through the mediobasal hypothalamus (MBH) in an opposing fashion independent of their respective peripheral receptors. Here, we review the current literature on brain leptin and insulin action in regulating WAT metabolism and discuss potential mechanisms and neuro-anatomical substrates that could explain the opposing effects of central leptin and insulin. Finally, we discuss the role of impaired hypothalamic control of WAT metabolism in the pathogenesis of insulin resistance, metabolic inflexibility and type 2 diabetes.