Adipose tissue is recognized as a pivotal organ in the development of insulin resistance. This study seeks to determine the effect of angiotensin receptor blockade (ARB) on insulin resistance of adipocytes in culture and in a rat model of type 2 diabetes. Treatment of Otsuka Long-Evans Tokushima Fatty rats with the ARB L158809 for six months significantly lowered fasting plasma glucose, cholesterol and triglyceride levels but led to higher plasma adiponectin levels. Insulin resistance, measured by an intraperitoneal glucose tolerance test, of the treated rats was significantly improved along with an increase in the number of small differentiated adipocytes; however, epididymal fat mass decreased. Treatment significantly lowered lipid peroxidation and MCP-1 expression while increasing adiponectin production by the adipose tissue. ARB treatment significantly improved insulin sensitivity and markedly suppressed AT2-induced oxidative stress, PAI-1 and MCP-1 levels and NF-kappaB activation of adipocytes in culture. Treatment increased adiponectin and PPARgamma expression along with intracellular triglyceride levels reflecting differentiation of the cultured adipocytes. Our study suggests that ARB treatment improves insulin resistance by modification of adipose tissue thereby blunting the development of diabetes.