Insulin signaling in adipose tissue plays an important role in lipid storage and regulation of glucose homeostasis. Using the Cre-loxP system, we created mice with fat-specific disruption of the insulin receptor gene (FIRKO mice). These mice have low fat mass, loss of the normal relationship between plasma leptin and body weight, and are protected against age-related and hypothalamic lesion-induced obesity, and obesity-related glucose intolerance. FIRKO mice also exhibit polarization of adipocytes into populations of large and small cells, which differ in expression of fatty acid synthase, C/EBP alpha, and SREBP-1. Thus, insulin signaling in adipocytes is critical for development of obesity and its associated metabolic abnormalities, and abrogation of insulin signaling in fat unmasks a heterogeneity in adipocyte response in terms of gene expression and triglyceride storage.