Insulin resistance is frequently accompanied by obesity and both obesity and type 2 diabetes are associated with a mild chronic inflammation. Elevated levels of various cytokines, such as TNF-alpha and IL-6, are typically found in the adipose tissue in these conditions. It has been suggested that many cytokines produced in the adipose tissue are derived from infiltrated inflammatory cells. However, the adipose tissue itself has proven to be an important endocrine organ, secreting several hormones and cytokines, usually referred to as adipokines. Peroxisome proliferator-activated receptor (PPAR)gamma is essential for adipocyte proliferation and differentiation. In recent years, PPARgamma and its ligands, the thiazolidinediones (TZD), have achieved great attention due to their insulin sensitizing and anti-inflammatory properties. Treatment with TZDs result in improved insulin signaling and adipocyte differentiation, increased adipose tissue influx of free fatty acids and inhibition of cytokine expression and action. As a result, PPARgamma plays a central role in maintaining a functional and differentiated adipose tissue.