Obesity is highly correlated with systemic insulin resistance. To assess the effect of fat cell on the development of hepatic insulin resistance, an in vitro system was developed in which primary hepatocytes were kept in co-culture with 3T3-L1 cells, then insulin signaling and glycogen production were subsequently analyzed in hepatocytes. The results showed that insulin-induced tyrosine phosphorylation of insulin receptor substrate (IRS)-2 was significantly blocked. Insulin-regulated activation of Akt kinase and glucose production in the hepatocytes were also reduced after co-culture. On the other hand, addition of TNF-alpha or IL-6 neutralizing antibodies to the supernatant of co-culture recovered both IRS-2 phosphorylation and Akt activation. In conclusion, fat cells may induce insulin resistance in liver cells, and this process appears to be mediated by TNF-alpha and IL-6. Our data present first the direct evidence of interaction for insulin signaling event between the adipocytes and hepatocytes.