As obesity and type 2 diabetes are becoming an epidemic in westernized countries, the incidence and prevalence of obesity- and diabetes-related co-morbidities are increasing. In type 2 diabetes ectopic lipid accumulation in the heart has been associated with cardiac dysfunction and apoptosis, a process termed lipotoxicity. Since cardiovascular diseases are the main cause of death in diabetic patients, diagnosis and treatment become increasingly important. Although ischaemic heart disease is a major problem in diabetes, non-ischaemic heart disease (better known as diabetic cardiomyopathy) becomes increasingly important with respect to the impairment of cardiac function and mortality in type 2 diabetes. The underlying aetiology of diabetic cardiomyopathy is incompletely understood but is beginning to be elucidated. Various mechanisms have been proposed that may lead to lipotoxicity. Therefore, this review will focus on the mechanisms of cardiac lipid accumulation and its relation to the development of cardiomyopathy.