Insulin resistance is a hallmark of type 2 diabetes mellitus and is associated with a metabolic and cardiovascular cluster of disorders (dyslipidaemia, hypertension, obesity [especially visceral], glucose intolerance, endothelial dysfunction), each of which is an independent risk factor for cardiovascular disease (CVD). Multiple prospective studies have documented an association between insulin resistance and accelerated CVD in patients with type 2 diabetes, as well as in non-diabetic individuals. The molecular causes of insulin resistance, i.e. impaired insulin signalling through the phosphoinositol-3 kinase pathway with intact signalling through the mitogen-activated protein kinase pathway, are responsible for the impairment in insulin-stimulated glucose metabolism and contribute to the accelerated rate of CVD in type 2 diabetes patients. The current epidemic of diabetes is being driven by the obesity epidemic, which represents a state of tissue fat overload. Accumulation of toxic lipid metabolites (fatty acyl CoA, diacylglycerol, ceramide) in muscle, liver, adipocytes, beta cells and arterial tissues contributes to insulin resistance, beta cell dysfunction and accelerated atherosclerosis, respectively, in type 2 diabetes. Treatment with thiazolidinediones mobilises fat out of tissues, leading to enhanced insulin sensitivity, improved beta cell function and decreased atherogenesis. Insulin resistance and lipotoxicity represent the missing links (beyond the classical cardiovascular risk factors) that help explain the accelerated rate of CVD in type 2 diabetic patients.