Aberrant TNF alpha expression in adipocytes is a molecular mechanism by which insulin action is modulated in adipose tissue. While this might be a compensatory response to limit adipose expansion, neither the mechanisms underlying this local effect nor its systemic biological consequences have been studied. It is also not clear whether TNF alpha-induced insulin resistance in adipocyte alone is responsible for systemic insulin resistance in the absence of obesity. In a transgenic mouse model deficient in endogenous TNF alpha, we demonstrate that specific expression of the transmembrane TNF alpha (mTNF alpha) in adipocytes leads to decreased whole body adipose mass, and local, but not systemic insulin resistance. These data demonstrate that exclusive action of TNF alpha in adipose tissue strongly inhibits insulin action at this site and leads to reduced adiposity in mice. However, this isolated adipocyte insulin resistance in the context of reduced fat mass and/or the absence of obesity is insufficient to alter systemic glucose homeostasis.