Adiponectin is a novel adipocyte-specific protein, which, it has been suggested, plays a role in the development of insulin resistance and atherosclerosis. Although it circulates in high concentrations, adiponectin levels are lower in obese subjects than in lean subjects. Apart from negative correlations with measures of adiposity, adiponectin levels are also reduced in association with insulin resistance and type 2 diabetes. Visceral adiposity has been shown to be an independent negative predictor of adiponectin. Thus, most features of the metabolic syndrome's negative associations with adiponectin have been shown. Adiponectin levels seem to be reduced prior to the development of type 2 diabetes, and administration of adiponectin has been accompanied by lower plasma glucose levels as well as increased insulin sensitivity. Furthermore, reduced expression of adiponectin has been associated with some degree of insulin resistance in animal studies indicating a role for hypoadiponectinaemia in relation to insulin resistance. The primary mechanisms by which adiponectin enhance insulin sensitivity appears to be through increased fatty acid oxidation and inhibition of hepatic glucose production. Adiponectin levels are increased by thiazoledinedione treatment, and this effect might be important for the enhanced insulin sensitivity induced by thiazolidinediones. In contrast, adiponectin levels are reduced by pro-inflammatory cytokines especially tumour necrosis factor-α. In summary, adiponectin in addition to possible anti-inflammatory and anti-atherogenic effects appears to be an insulin enhancer, with potential as a new pharmacologic treatment modality of the metabolic syndrome and type 2 diabetes.