Obese adolescents are at risk of developing NAFLD and type 2 diabetes. We measured noninvasively the IHF content of obese adolescents to ascertain whether it is associated with insulin resistance and abnormal energy homeostasis. IHF content, whole body energy homeostasis, insulin sensitivity, and body composition were measured using localized hepatic (1)H-MRS, indirect calorimetry, fasting-derived and 3-h-OGTT-derived surrogate indexes (HOMA2 and WBISI), and DEXA, respectively, in 54 obese adolescents (24 female and 30 male, age 13 +/- 2 yr, BMI >99th percentile for their age and sex). NAFLD (defined as IHF content >5% wet weight) was found in 16 individuals (30%) in association with higher ALT (P < 0.006), Hb A(1c) (P = 0.021), trunk fat content (P < 0.03), and lower HDL cholesterol (P < 0.05). Individuals with NAFLD had higher fasting plasma glucose (89 +/- 8 vs. 83 +/- 9 mg/dl, P = 0.01) and impaired insulin sensitivity (HOMA2 and WBISI, P < 0.05). Meanwhile, parameters of insulin secretion were unaffected. Their reliance on fat oxidation in the fasting state was lower (RQ 0.83 +/- 0.08 vs. 0.77 +/- 0.05, P < 0.01), and their ability to suppress it during the oral glucose challenge was impaired (P < 0.05) vs. those with normal IHF content. When controlling for trunk fat content, the correlation between IHF content and insulin sensitivity was weakened, whereas the correlation with fasting lipid oxidation was maintained. In conclusion, NAFLD is common in childhood obesity, and insulin resistance is present in association with increased trunk fat content. In contrast, the rearrangement of whole body substrate oxidation in these youngsters appeared to be an independent feature.