Panniculitis and lipodystrophy are rare disorders of subcutaneous tissue. Recently the incidence of lipodystrophy has been increasing secondary to its appearance in patients with HIV. In this population, the lipodystrophy appears to be a direct consequence of drug therapy. A review of the available literature regarding pathogenesis and treatment options is discussed. The diagnosis of panniculitis has been hampered by problems. The recent literature has concentrated on ways of improving pathologic diagnostic yields, and new aids in diagnosis are presented.