OBJECTIVE: To investigate how insulin sensitivity and glucose metabolism differ in adipocytes between different fat depots of male and female mice and how sex steroids contribute to these differences. RESEARCH DESIGN AND METHODS: Adipocytes from intra-abdominal/perigonadal (PG) and subcutaneous (SC) adipose tissue from normal, castrated, or steroid-implanted animals were isolated and analyzed for differences in insulin sensitivity and glucose metabolism. RESULTS: Adipocytes from both PG and SC depots of females have increased lipogenic rates compared with those from males. In females, intra-abdominal PG adipocytes are more insulin-sensitive than SC adipocytes and more insulin-sensitive than male adipocytes from either depot. When stimulated by low physiological concentrations of insulin, female PG adipocytes show a robust increase in Akt and extracellular signal-related kinase (ERK) phosphorylation and lipogenesis, whereas male adipocytes show activation only at higher insulin concentrations. Adipocytes from females have higher mRNA/protein levels of several genes involved in glucose and lipid metabolism. After castration, adipocytes of male mice showed increased insulin sensitivity and increased lipogenic rates, whereas adipocytes of females demonstrate decreased lipid production. Increasing estrogen above physiological levels, however, also reduced lipid synthesis in females, whereas increasing dihydrotestosterone in males had no effect. CONCLUSIONS: There are major sex differences in insulin sensitivity in adipose tissue, particularly in the intra-abdominal depot, that are regulated by physiological levels of sex steroids. The increased sensitivity to insulin and lipogenesis observed in adipocytes from females may account for their lower level of insulin resistance and diabetes risk despite similar or higher fat content than in males.