Essential elements of all cells – lipids – play important roles in energy production, signalling and as structural components. Despite these critical functions, excessive availability and intracellular accumulation of lipid is now recognised as a major factor contributing to many human diseases, including obesity and diabetes. In the context of these metabolic disorders, ectopic deposition of lipid has been proposed to have deleterious effects on insulin action. While this relationship has been recognised for some time now, there is currently no unifying mechanism to explain how lipids precipitate the development of insulin resistance. This review summarises the evidence linking specific lipid molecules to the induction of insulin resistance, describing some of the current controversies and challenges for future studies in this field.