Metabolic syndrome is associated with dysfunctional adipose tissue that is most likely a consequence of the enlargement of adipocytes and infiltration of macrophages into adipose tissue. Obesity and ectopic lipid deposition are major risk factors for diseases ranging from insulin resistance to type 2 diabetes and atherosclerosis. Enlargement of adipocytes, due to impaired adipocyte differentiation, leads to a chronic state of inflammation in the adipocytes and adipose tissue with a reduction in the secretion of adiponectin and increase in the secretion of proinflammatory cytokines such as interleukin (IL)-6, IL-8 and monocyte chemoattractant protein (MCP)-1. The secretion of cytokines like tumour necrosis factor (TNF)- alpha, mainly from macrophages, enhances local inflammation. These proinflammatory cytokines might also substantially affect cardiovascular function and morphology. Furthermore, a proinflammatory state in adipose tissue can lead to local insulin resistance with an impaired inhibitory effect of insulin on the release of FFAs and endothelial dysfunction that clearly promotes cardiovascular diseases and type 2 diabetes. The underlying mechanisms of ectopic fat accumulation in various tissues and the impact on metabolic syndrome and its association with insulin resistance are discussed.