According to the “lipid toxicity” hypothesis, the action of PPARγ on adipocytes normally keeps the cells ready to synthesize and store triacylglycerols—the adipocytes are insulin-sensitive and produce leptin, which leads to their continued intracellular deposition of TAGs.

However, excess caloric intake in obese individuals causes adipocytes to become filled with TAGs, leaving adipose tissue unable to meet any further demand for TAG storage. Lipid-filled adipose tissue releases protein factors that attract macrophages, which infiltrate the tissue and may eventually represent as much as 50% of the adipose tissue by mass.

Macrophages trigger the inflammatory response, which impairs TAG deposition in adipocytes and favors release of free fatty acids into the blood. These excess fatty acids enter liver and muscle cells, where they are converted to TAGs that accumulate as lipid droplets. This ectopic deposition of TAGs leads to insulin insensitivity in liver and muscle, the hallmark of type 2 diabetes.

According to this hypothesis, excess stored fatty acids and TAGs are toxic to liver and muscle. Some individuals are less well equipped genetically to handle this burden of ectopic lipids and are more susceptible to the cellular damage that leads to development of type 2 diabetes. Insulin resistance probably involves impairment of several of the mechanisms by which insulin acts on metabolism, which include changes in protein levels and changes in the activities of signaling enzymes and transcription factors. For example, both adiponectin synthesis in adipocytes and adiponectin levels in the blood decrease with obesity and increase with weight loss.