Insulin resistance is one of the key factors responsible for hyperglycaemia in type 2 diabetes and can result in a number of metabolic abnormalities associated with cardiovascular disease (insulin resistance syndrome), even in the absence of overt diabetes. The mechanisms involved in the development of insulin resistance are multifactorial and are only partly understood, but increased availability of free fatty acids (FFAs) is of particular importance for the liver and skeletal muscle. The role of FFAs in type 2 diabetes is most evident in obese patients who have several abnormalities in FFA metabolism. Because of a mass effect, the release of FFAs from the total adipose tissue depot to the blood stream is increased and the high concentration of circulating FFAs impairs muscle uptake of glucose by competitive inhibition. In upper-body obesity, which predisposes individuals to type 2 diabetes, the rate of lipolysis is accelerated in visceral adipose tissue. This results in a selective increase in FFA mobilisation to the portal vein, which connects visceral fat to the liver. A high 'portal' FFA concentration has undesirable effects on the liver, resulting in dyslipidaemia, hyperinsulinaemia, hyperglycaemia and hepatic insulin resistance. Recently, a new class of antidiabetic agents, the thiazolidinediones (TZDs) or 'glitazones' has been developed. A prominent effect of these agents is the lowering of circulating FFA levels and it is believed, but not yet proven, that this interaction with FFAs constitutes a major mechanism behind the glucose-lowering effect of the TZDs.