Adiponectin is one of the most thoroughly studied adipocytokines. Low plasma levels of adiponectin are found to associate with obesity, metabolic syndrome, diabetes and many other human diseases. From animal experiments and human studies, adiponectin has been shown to be a key regulator of insulin sensitivity. In this article, we review the evidence and propose that hypo-adiponectinemia is not a major cause of obesity. Instead, it is the result of obesity-induced insulin resistance in the adipose tissue. Hypo-adiponectinemia then mediates the metabolic effects of obesity on the other peripheral tissues, such as liver and skeletal muscle and may also exert some direct effects on end-organ damage. We propose that deciphering the molecular details governing the adiponectin gene expression and protein secretion will lead us to more comprehensive understanding of the mechanisms of insulin resistance in the adipose tissue and provide us new avenues for the therapeutic intervention of obesity and insulin resistance-related human disorders.