Obesity is a major risk factor for insulin resistance, type 2 diabetes mellitus and cardiovascular disease. The pathophysiology of obesity is associated with chronic low-grade inflammation. Adipose tissue in obesity is significantly infiltrated by macrophages that secrete cytokines. The mechanisms of interaction between macrophages and adipocytes, leading to macrophage activation and increased cytokine release, remain to be elucidated. We reasoned that an adipocyte-derived factor might stimulate activation of macrophages. We have identified pigment epithelium-derived factor (PEDF) as a mediator of inflammation that is secreted by adipocytes and mediates macrophage activation. Recombinant PEDF activates macrophages to release tumor necrosis factor (TNF) and interleukin-1 (IL-1). The PEDF receptor adipose triglyceride lipase (ATGL) is required for PEDF-mediated macrophage activation. Selective inhibition of ATGL on macrophages attenuates PEDF-induced TNF production, and PEDF enhances the phosphorylation of p38 and extracellular signal-regulated kinase 1/2 mitogen-activated protein kinases. PEDF administration to rats results in increased serum TNF levels, and insulin resistance. Together, these findings suggest that PEDF secreted by adipocytes contributes to the onset and maintenance of chronic inflammation in obesity, and may be a therapeutic target in ameliorating insulin resistance.