The rat was used as a model for the assessment of a high fat diet (HFD) and HFD/streptozotocin (STZ) induced Type II diabetes upon lipid deposition and development of inflammation in metabolically active tissues. HFD feeding for a period of 10 weeks did not induce significant weight gain in animals compared to those fed on normal chow (NC). There was also no significant effect of HFD feeding upon blood glucose and insulin levels. Adipose and skeletal muscle tissues showed minimal effects of HFD feeding at both the histological and molecular level. Histological assessment of liver tissue revealed marked steatosis in HFD fed animals. Molecular studies showed that genes involved in lipid and glucose metabolism and insulin signalling were decreased while genes involved in endoplasmic reticulum (ER) stress were elevated. Liver triglyceride fatty acid profiles resembled those of the diet with no significant differences in lipoprotein triglyceride levels observed between experimental groups. STZ injection induced hypoinsulinemia and hyperglycaemia. The changes observed at the molecular level were related to insulin depletion. Pioglitazone intervention did not cause any major changes in the STZ treated animals. The main conclusion was that HFD induces liver steatosis due to increase lipid flux from the diet despite the absence of weight gain or increased adipose tissue or skeletal muscle lipid content. This suggests that consumption of a high fat diet may cause the development of fatty Liver disease in the absence of weight gain or overt obesity.