The past two decades have seen an explosive increase of obesity rates worldwide, with more than one billion adults overweight and 300 million of them obese. Obesity and its associated complications have become leading causes of morbidity and mortality in the United States and major contributing factors to the rising costs of national health care. The pathophysiology of obesity and type 2 diabetes in rodents and humans is characterized by low-grade inflammation and chronic activation of immune pathways in adipose tissue and liver. The CD40 receptor and its ligand, CD40L, initiate immune cell signaling promoting inflammation, but conflicting data on CD40L-null mice confound its role in obesity-associated insulin resistance. A clear understanding of how CD40 and its ligand communicate to regulate and sustain the inflammatory environment of obesity is lacking. Here we demonstrate that CD40 receptor deficient mice on a high-fat diet display the expected decrease in hepatic cytokine levels, but paradoxically exhibit liver steatosis, insulin resistance and glucose intolerance compared with their age-matched wild-type controls. Hyperinsulinemic-euglycemic clamp studies also demonstrated insulin resistance in glucose utilization by the CD40-null mice compared with wild-type mice. In contrast to liver, visceral adipose tissue in CD40 deficient animals harbors elevated cytokine levels and infiltration of inflammatory cells, particularly macrophages and CD8+ effector T cells. In addition, ex vivo explants of epididymal adipose tissue from CD40-null mice display elevated basal and isoproterenol-stimulated lipolysis, suggesting a potential increase of lipid efflux from visceral fat to the liver. These findings reveal that 1) CD40-null mice represent an unusual model of hepatic steatosis with reduced hepatic inflammation, and 2) CD40 unexpectedly functions in adipose tissue to attenuate the chronic inflammation associated with obesity, thereby protecting against hepatic steatosis.