Obesity and dysfunctional energy partitioning can lead to the development of insulin resistance and type 2 diabetes. The antidiabetic thiazolidinediones shift the energy balance toward storage, leading to an increase in whole-body adiposity. These studies examine the effects of pioglitazone (Pio) on adipose tissue physiology, accumulation, and distribution in female Zucker (fa/fa) rats. Pio treatment (up to 28 days) decreased the insulin-resistant and hyperlipidemic states and increased food consumption and whole-body adiposity. Magnetic resonance imaging (MRI) analysis and weights of fat pads demonstrated that the increase in adiposity was not only limited to the major fat depots but also to fat deposition throughout the body. Adipocyte sizing profiles, fat pad histology, and DNA content show that Pio treatment increased the number of small adipocytes because of both the appearance of new adipocytes and the shrinkage and/or disappearance of existing mature adipocytes. The remodeling was time dependent, with new small adipocytes appearing in clusters throughout the fat pad, and accompanied by a three- to fourfold increase in citrate synthase and fatty acid synthase activity. The appearance of new fat cells and the increase in fat mass were depot specific, with a rank order of responsiveness of ovarian > retroperitoneal > subcutaneous. This differential depot effect resulted in a redistribution of the fat mass in the abdominal region such that there was an increase in the visceral:subcutaneous ratio, as confirmed by MRI analysis. Although the increased adiposity is paradoxical to an improvement in insulin sensitivity, the quantitative increase of adipose mass should be viewed in context of the qualitative changes in adipose tissue, including the remodeling of adipocytes to a smaller size with higher lipid storage potential. This shift in energy balance is likely to result in lower circulating free fatty acid levels, ultimately improving insulin sensitivity and the metabolic state.