Adiponectin is a white and brown adipose tissue hormone, also known as gelatin-binding protein-28 (GBP28), AdipoQ, adipocyte complement-related protein (ACRP30), or apM1. Adiponectin circulates in the bloodstream in trimeric, hexameric, and high-molecular-mass species, while different forms of adiponectin have been found to play distinct roles in the balance of energy homoeostasis. Adiponectin is an insulin sensitizing hormone that exerts its action through its receptors AdipoR1, AdipoR2, and T-cadherin. AdipoR1 is expressed abundantly in muscle, whereas AdipoR2 is predominantly expressed in the liver. Adiponectin is inversely proportional to obesity, diabetes, and other insulin-resistant states. In this review we present the current findings regarding the regulation of its production and several new findings pertaining to its biological effects. Adiponectin enhances AMPK and the PPARα pathway in the liver and skeletal muscle. Adiponectin increases fatty acids oxidation, which lowers circulating free fatty acids and prevents insulin resistance. Adiponectin has been reported to exert an antiatherosclerotic effect. It inhibits macrophage activation and foam cell accumulation, while it also augments endothelial nitrous oxide production and protects the vasculature by reducing platelet aggregation and vasodilation. Apart from causing metabolic dysfunction, adiponectin deficiency may also contribute to coronary heart disease, steatohepatitis, insulin resistance, nonalcoholic fatty liver disease, and a wide array of cancers. In this study, we present ample evidence that adiponectin mediates multiple molecular pathways. We therefore support the concept that it shows distinct potential for being of therapeutic value in the treatment of obesity related diseases, ranging from metabolic syndrome to malignancies.