Obesity leads to a proinflammatory state with immune responses that include infiltration of adipose tissue with macrophages. These macrophages are believed to alter insulin sensitivity in adipocytes, but the mechanisms that underlie this effect have not been characterized. We have explored the interaction between macrophages and adipocytes in the context of both indirect and direct coculture. Macrophage-secreted factors blocked insulin action in adipocytes via downregulation of GLUT4 and IRS-1, leading to a decrease in Akt phosphorylation and impaired insulin-stimulated GLUT4 translocation to the plasma membrane. GLUT1 was upregulated with a concomitant increase in basal glucose uptake. These changes recapitulate those seen in adipose tissue from insulin-resistant humans and animal models. TNF-α-neutralizing antibodies partially reversed the insulin resistance produced by macrophage-conditioned media. Peritoneal macrophages and macrophage-enriched stromal vascular cells from adipose tissue also attenuated responsiveness to insulin in a manner correlating with inflammatory cytokine secretion. Adipose tissue macrophages from obese mice have an F4/80⁺CD11b⁺CD68⁺CD14⁻ phenotype and form long cellular extensions in culture. Peritoneal macrophages take on similar characteristics in direct coculture with adipocytes and induce proinflammatory cytokines, suggesting that macrophage activation state is influenced by contact with adipocytes. Thus both indirect/secreted and direct/cell contact-mediated factors derived from macrophages influence insulin sensitivity in adipocytes.