CONTEXT: Adiponectin is an adipocyte-derived cytokine with insulin-sensitizing and antiinflammatory properties. These dual actions have not previously been examined in the context of human disease. OBJECTIVES: Our objective was to examine the adiponectin axis in type 1 diabetes (T1D). T1D is an autoimmune inflammatory disease resulting from pancreatic β-cell destruction, in which insulin resistance associates with progression to disease. DESIGN, PATIENTS, AND INTERVENTIONS: We measured circulating adiponectin and adiponectin receptor expression on blood-immune cells from 108 matched healthy, T1D, and type 2 diabetic subjects. We tested adiponectin effect on T cell proliferation to islet antigens and antigen-presenting function of monocyte-derived dendritic cells (mDCs). Lastly, we assessed the effect of a 3-week lifestyle intervention program on immune cell adiponectin receptor expression in 18 healthy subjects. RESULTS: Circulating concentrations of adiponectin were not affected by T1D. However, expression of adiponectin receptors on blood monocytes was markedly reduced and inversely associated with insulin resistance. Reduced adiponectin receptor expression resulted in increased T cell proliferation to islet-antigen presented by autologous mDCs. We demonstrated a critical role for adiponectin in down-regulating the costimulatory molecule CD86 on mDCs, and this function was impaired in T1D. We proceeded to show that lifestyle intervention increased adiponectin receptor but reduced CD86 expression on monocytes. CONCLUSIONS: These data indicate that T cells are released from the antiinflammatory effects of adiponectin in T1D and suggest a mechanism linking insulin resistance and islet immunity. Furthermore, we suggest that interventions that reduce insulin resistance could modulate the inflammatory process in T1D.