Background & Aims: Obesity-driven, low-grade inflammation affects systemic metabolic function and can lead to insulin resistance, hepatic steatosis, and atherosclerosis. Decreased expression of tissue inhibitor of metalloproteinase 3 (Timp3) is a catalyst for insulin resistance and inflammation. Timp3 is a natural inhibitor of matrix metalloproteinases, tumor necrosis factor- –converting enzyme (TACE), and vascular endothelial growth factor receptor 2, and therefore could affect signaling processes involved in inflammation and angiogenesis. Methods: We assessed the effects of Timp3 on inflammation, tissue remodeling, and intermediary metabolism in mice, under conditions of environmental stress (high-fat diet), genetic predisposition to insulin resistance (insulin receptor [Insr] haploinsufficiency), and varying levels of inflammation (Timp3 or Tace deficiencies). Metabolic tests, immunohistochemistry, real-time polymerase chain reaction, and immunoblotting were used to compare data from wild-type, Insr/, Timp3/, Insr/Timp3/, and Insr/Tace/ mice placed on high-fat diets for 10 weeks. Results: Insr/Timp3/ mice showed a higher degree of adipose and hepatic inflammation compared with wildtype, Insr/, Timp3/, and Insr/Tace/ mice. In particular, the Insr/Timp3/ mice developed macrovesicular steatosis and features of severe nonalcoholic fatty liver disease, including lobular and periportal inflammation, hepatocellular ballooning, and perisinusoidal fibrosis. These were associated with increased expression of inflammatory and steatosis markers, including suppressor of cytokine signaling 3 and stearoyl CoA desaturase 1, in both liver and adipose tissue. Interestingly, Insr/Tace/ mice had a nearly opposite phenotype. Conclusions: Timp3, possibly through its regulation of TACE, appears to have a role in the pathogenesis of fatty liver disease associated with obesity.