Obesity-induced inflammation originating from expanding adipose tissue interferes with insulin sensitivity. Important metabolic effects have been recently attributed to IL-1β and IL-18, two members of the IL-1 family of cytokines. Processing of IL-1β and IL-18 requires cleavage by caspase-1, a cysteine protease regulated by a protein complex called the inflammasome. We demonstrate that the inflammasome/caspase-1 governs adipocyte differentiation and insulin sensitivity. Caspase-1 is upregulated during adipocyte differentiation and directs adipocytes toward a more insulin-resistant phenotype. Treatment of differentiating adipocytes with recombinant IL-1β and IL-18, or blocking their effects by inhibitors, reveals that the effects of caspase-1 on adipocyte differentiation are largely conveyed by IL-1β. Caspase-1 and IL-1β activity in adipose tissue is increased both in diet-induced and genetically induced obese animal models. Conversely, mice deficient in caspase-1 are more insulin sensitive as compared to wild-type animals. In addition, differentiation of preadipocytes isolated from caspase-1^−/− or NLRP3^−/− mice resulted in more metabolically active fat cells. In vivo, treatment of obese mice with a caspase-1 inhibitor significantly increases their insulin sensitivity. Indirect calorimetry analysis revealed higher fat oxidation rates in caspase-1^−/− animals. In conclusion, the inflammasome is an important regulator of adipocyte function and insulin sensitivity, and caspase-1 inhibition may represent a novel therapeutic target in clinical conditions associated with obesity and insulin resistance.