Iron overload is associated with increased diabetes risk. We therefore investigated the effect of iron on adiponectin, an insulin-sensitizing adipokine that is decreased in diabetic patients. In humans, normal-range serum ferritin levels were inversely associated with adiponectin, independent of inflammation. Ferritin was increased and adiponectin was decreased in type 2 diabetic and in obese diabetic subjects compared with those in equally obese individuals without metabolic syndrome. Mice fed a high-iron diet and cultured adipocytes treated with iron exhibited decreased adiponectin mRNA and protein. We found that iron negatively regulated adiponectin transcription via FOXO1-mediated repression. Further, loss of the adipocyte iron export channel, ferroportin, in mice resulted in adipocyte iron loading, decreased adiponectin, and insulin resistance. Conversely, organismal iron overload and increased adipocyte ferroportin expression because of hemochromatosis are associated with decreased adipocyte iron, increased adiponectin, improved glucose tolerance, and increased insulin sensitivity. Phlebotomy of humans with impaired glucose tolerance and ferritin values in the highest quartile of normal increased adiponectin and improved glucose tolerance. These findings demonstrate a causal role for iron as a risk factor for metabolic syndrome and a role for adipocytes in modulating metabolism through adiponectin in response to iron stores.