Adiponectin is a recently identified adipose tissue-derived protein (adipocytokine) with important metabolic effects. It is exclusively expressed in adipose tissue and released into the circulation. Adiponectin expression and/or secretion is increased by insulin like growth factor-1 and ionomycin, and decreased by tumor necrosis factor-alpha, glucocorticoids, beta-adrenergic agonists and cAMP. Data for insulin are somewhat inconclusive. Moreover, adiponectin expression and secretion are increased by activators of peroxisome proliferator-activated receptor (PPAR)-gamma. Besides inhibiting inflammatory pathways, recombinant adiponectin increases insulin sensitivity and improves glucose tolerance in various animal models. This insulin-sensitizing effect appears to be mostly attributable to enhanced suppression of glucose production, but beneficial effects on muscle cannot be excluded. In humans, plasma adiponectin concentrations exceed those of any other hormone by a thousand times; they decrease with obesity and are positively associated with whole-body insulin sensitivity. Therefore, low adiponectin may contribute to the decrease in whole-body insulin sensitivity that accompanies obesity. Furthermore, there is increasing evidence that genetic variants in the adiponectin gene itself and/or in genes encoding adiponectin-regulatory proteins--such as PPAR-gamma--may be associated with hypoadiponectinemia, insulin resistance and type 2 diabetes. This suggests that adiponectin may reflect PPAR-gamma activity in vivo. Finally, reversal or alleviation of hypoadiponectinemia may represent a target for development of drugs improving insulin sensitivity and glucose tolerance.