I n lipoatrophic diabetes, a lack of fat is associated with insulin resistance and hyperglycemia. This is in striking contrast to the usual association of diabetes with obesity. To understand the underlying mechanisms, we transplanted adipose tissue into A-ZIP/F-1 mice, which have a severe form of lipoatrophic diabetes. Transplantation of wild-type fat reversed the hyperglycemia, dramatically lowered insulin levels, and improved muscle insulin sensitivity, demonstrating that the diabetes in A-ZIP/F-1 mice is caused by the lack of adipose tissue. All aspects of the A-ZIP/F-1 phenotype including hyperphagia, hepatic steatosis, and somatomegaly were either partially or completely reversed. However, the improvement in triglyceride and FFA levels was modest. Donor fat taken from parametrial and subcutaneous sites was equally effective in reversing the phenotype. The beneficial effects of transplantation were dose dependent and required near-physiological amounts of transplanted fat. Transplantation of genetically modified fat into A-ZIP/F-1 mice is a new and powerful technique for studying adipose physiology and the metabolic and endocrine communication between adipose tissue and the rest of the body.