Obesity is commonly associated with the development of insulin resistance and diabetes in humans and rodents. Insulin resistance and diabetes are observed in lipoatrophic individuals or rodent models of lipoatrophy. Here we focus on the role of leptin, the product of the obesity (ob) gene, in the development of insulin resistance and diabetes associated with obesity and lipoatrophy. We review the reported effects of leptin on whole body glucose metabolism and compare and contrast these with direct effects on skeletal muscle, fat and liver. This summary of paradoxical observations on the effects of leptin on glucose homeostasis and the ability of leptin to induce or improve insulin resistance suggests that a complex interplay exists between direct peripheral and centrally mediated effects of the hormone. Evidence suggesting that leptin acts as a mediator of insulin release from pancreatic beta cells is reviewed. Finally, intracellular signaling mechanisms stimulated by both leptin and insulin are discussed, with potential points of cross-talk suggested.