Increased fat mass (FM), and in particular a specific increase in visceral fat (VF), may account for the age-associated decrease in insulin action and the development of Syndrome X. Utilizing chronic caloric restriction (CR) with aging in a rodent model, we dissociated the effects of VF and FM, and demonstrated that the decrease in VF accumulation was sufficient to prevent the marked decrease in hepatic insulin action. This suggests that the typical increase in VF with aging, rather than aging per se, determines hepatic insulin resistance. To directly assess the role of VF, we studied rats after surgical removal of VF or sham operation. Surgical extraction of VF (which accounts for approximately 10% of total fat) improved hepatic insulin action by more than twofold. We studied the role of fat-derived peptides in the regulation of body composition and insulin action. While VF extraction resulted in decreased gene expression for leptin and TNF-alpha in the subcutaneous adipose, administration of leptin selectively decreased visceral fat (approximately 60%), and enhanced the action of insulin on inhibiting hepatic glucose production (approximately 80%). Thus, the cause-effect relationship between the age-related increase in VF and the decrease in hepatic insulin action may involve the failure of leptin to "cross talk" with other fat depots to regulate fat distribution.