Insulin sensitivity is impaired and ectopic fat (accretion of lipids outside of typical adipose tissue depots) increased in obese adults and adolescents. It is unknown how early in life this occurs; thus, it is important to evaluate young children to identify potential factors leading to the development of metabolic syndrome. We examined an ethnically diverse cohort of healthy, exclusively prepubertal children (N = 123; F = 57, M = 66; age 8.04 ± 0.77 years) to examine differences in insulin sensitivity and ectopic and visceral fat deposition between obese and nonobese youth. Obesity was categorized by age- and sex-adjusted BMI z-scores (nonobese = z-score <2 (N = 94) and obese = z-score ≥2 (N = 29)). Insulin sensitivity was assessed by both a frequently sampled intravenous glucose tolerance test (Si) and the homeostatic model assessment of insulin resistance (HOMAIR). Intramyocellular lipids (IMCLs) from soleus and intrahepatic lipids (IHLs) were assessed by magnetic resonance spectroscopy, visceral adipose tissue (VAT) by magnetic resonance imaging, and total body fat by dual-energy X-ray absorptiometry. We also examined serum lipids (total cholesterol, triglycerides, high-density lipoprotein cholesterol (HDL-C) and low-density lipoprotein cholesterol) and blood pressure (diastolic and systolic). Obese children exhibited significantly lower Si (5.9 ± 5.98 vs. 13.43 ± 8.18 (mµ/l)−1·min−1, P = 0.01) and HDL-C and higher HOMAIR (1.68 ± 1.49 vs. 0.63 ± 0.47, P < 0.0001), IMCL (0.74 ± 0.39 vs. 0.44 ± 0.21% water peak, P < 0.0001), IHL (1.49 ± 1.13 vs. 0.54 ± 0.42% water peak, P < 0.0001), VAT (20.16 ± 8.01 vs. 10.62 ± 5.44 cm2, P < 0.0001), total cholesterol, triglycerides, low-density lipoprotein cholesterol, and systolic blood pressure relative to nonobese children. These results confirm significantly increased ectopic fat and insulin resistance in healthy obese vs. nonobese children prior to puberty. Excessive adiposity during early development appears concomitant with precursors of type 2 diabetes and the metabolic syndrome.