Insulin resistance is a key feature of obesity and type-2 diabetes and has been related to augmented lipid availability, mitochondrial impairment and inflammatory pathways. However, the cellular mechanism underlying human insulin resistance is still unclear. Our data suggest that the adaptability of mitochondria to metabolic conditions is impaired in insulin resistant states. We also found that hepatocellular lipid deposition is a sensitive marker of whole body insulin resistance and muscle mitochondrial function. This supports the importance of an interplay between muscle and liver energy metabolism and fat storage. We developed a non-invasive technique to determine hepatic energy metabolism and showed for the first time in humans that impaired hepatocellular mitochondrial function relates to obesity and insulin resistance. We also examined the early sequence of cellular events during the development of lipid-induced insulin resistance in healthy humans and found that elevation of plasma free fatty acids induces an increase of myocellular diacylglycerol which is followed by activation of protein kinase C isoforms and inhibition of insulin signaling. In young obese insulin resistant but glucose tolerant humans, similar diacylglycerol species are increased which are related to activation of protein kinase C and impaired insulin signaling. In mice with lipodystrophy, steatosis and insulin resistance we are now investigating cellular mechanisms underlying diabetic cardiomyopathy. In summary, this line of research continues to extend the knowledge on the development and sequale of insulin resistance in obese humans.