Tumor necrosis factor α (TNF-α) has well-described effects on lipid metabolism in the context of acute inflammation, as in sepsis. Recently, increased TNF-α production has been observed in adipose tissue derived from obese rodents or human subjects and TNF-α has been implicated as a causative factor in obesity-associated insulin resistance and the pathogenesis of type 2 diabetes. Thus, current evidence suggests that administration of exogenous TNF-α to animals can induce insulin resistance, whereas neutralization of TNF-α can improve insulin sensitivity. Importantly, results from knockout mice deficient in TNF-α or its receptors have suggested that TNF-α has a role in regulating in vivo insulin sensitivity. However, the absence of TNF-α action might only partially protect against obesity-induced insulin resistance in mice. Multiple mechanisms have been suggested to account for these metabolic effects of TNF-α. These include the downregulation of genes that are required for normal insulin action, direct effects on insulin signaling, induction of elevated free fatty acids via stimulation of lipolysis, and negative regulation of PPARγ, an important insulin-sensitizing nuclear receptor. Although current evidence suggests that neutralizing TNF-α in type 2 diabetic subjects is not sufficient to cause metabolic improvement, it is still probable that TNF-α is a contributing factor in common metabolic disturbances such as insulin resistance and dyslipidemia.