Type 2 diabetes (T2DM) is associated with chronic low-grade inflammation. Adipose tissue (AT) may represent an important site of inflammation. 3T3-L1 studies have demonstrated that lipopolysaccharide (LPS) activates toll-like receptors (TLRs) to cause inflammation. For this study, we 1) examined activation of TLRs and adipocytokines by LPS in human abdominal subcutaneous (AbdSc) adipocytes, 2) examined blockade of NF-κB in human AbdSc adipocytes, 3) examined the innate immune pathway in AbdSc AT from lean, obese, and T2DM subjects, and 4) examined the association of circulating LPS in T2DM subjects. The findings showed that LPS increased TLR-2 protein expression twofold (P < 0.05). Treatment of AbdSc adipocytes with LPS caused a significant increase in TNF-α and IL-6 secretion (IL-6, Control: 2.7 ± 0.5 vs. LPS: 4.8 ± 0.3 ng/ml; P < 0.001; TNF-α, Control: 1.0 ± 0.83 vs. LPS: 32.8 ± 6.23 pg/ml; P < 0.001). NF-κB inhibitor reduced IL-6 in AbdSc adipocytes (Control: 2.7 ± 0.5 vs. NF-κB inhibitor: 2.1 ± 0.4 ng/ml; P < 0.001). AbdSc AT protein expression for TLR-2, MyD88, TRAF6, and NF-κB was increased in T2DM patients (P < 0.05), and TLR-2, TRAF-6, and NF-κB were increased in LPS-treated adipocytes (P < 0.05). Circulating LPS was 76% higher in T2DM subjects compared with matched controls. LPS correlated with insulin in controls (r = 0.678, P < 0.0001). Rosiglitazone (RSG) significantly reduced both fasting serum insulin levels (reduced by 51%, P = 0.0395) and serum LPS (reduced by 35%, P = 0.0139) in a subgroup of previously untreated T2DM patients. In summary, our results suggest that T2DM is associated with increased endotoxemia, with AT able to initiate an innate immune response. Thus, increased adiposity may increase proinflammatory cytokines and therefore contribute to the pathogenic risk of T2DM.