Insulin resistance (IR) is more severe in type 2 DM than in non-diabetics but whether there are differences in body composition that contribute is uncertain. DXA and regional CT imaging were conducted to assess adipose tissue (AT) distribution and fat content in liver and muscle in 67 participants with type 2 DM (F39/M28, age 60±7 yrs, BMI 34±3 kg/m²) and in 35 similarly obese, non-diabetic volunteers (F20/M15, age 55±8 yrs, BMI 33±2 kg/m²). A biopsy of AT was done to measure adipocyte size. A glucose clamp was performed at an insulin infusion of 80 mU/min-m² to assess IR. There was more severe IR in type 2 DM (6.1±2.3 vs. 9.9±3.3 mg/min/kg-FFM; p<0.01). Group comparisons were performed after adjusting for age, sex, race, height and FM. Type 2 DM was associated with less leg fat mass (leg-FM; -1.2±0.4 kg; p<0.01), more trunk FM (+1.1±0.4 kg; p<0.05), greater hepatic fat (p<0.05), and more sub-fascial adipose tissue (p<0.05). There was a significant group by sex interaction for VAT; VAT was greater in women with type 2 DM (p<0.01). Mean adipocyte size (AS) did not differ across groups, and smaller mean AS was associated with increased leg-FM, while larger AS was related to more trunk-FM (both p<0.05). Group differences in IR were modestly attenuated by adjusting for leg-FM, trunk-FM and hepatic fat, but these adjustments only partially accounted for the more severe IR of type 2 DM. In summary, type 2 DM, is associated with less leg-FM and greater trunk-FM and hepatic fat.