The incidence of type 1 and type 2 diabetes mellitus in the pediatric population has increased over the past decade. The practitioner is often faced with the challenge of differentiating between type 1 and type 2 diabetes at the time of initial diagnosis because of the overlap of clinical and laboratory characteristics between these two entities. Adipokines are proteins secreted by the adipose tissue. Leptin and adiponectin are two adipokines that have been extensively studied in vitro, in animal studies, and in human subjects with type 1 and type 2 diabetes. Leptin and adiponectin play a significant role in the regulation of lipid and carbohydrate metabolism. Adiponectin increases insulin sensitivity in both the liver and skeletal muscle. Leptin decreases appetite, increases energy expenditure, suppresses insulin synthesis and secretion and increases insulin sensitivity. Changes in the secretion or sensitivity to leptin and adiponectin may contribute to the development of type 1 and type 2 diabetes. Adiponectin is higher in adult and pediatric patients with type 1 diabetes compared to those with type 2 diabetes. Data regarding leptin levels are contradictory. Most studies report decreased serum leptin at the time of diagnosis in type 1 diabetes compared to type 2 diabetes subjects and non-diabetic controls. This paper will review basic research and clinical evidence supporting the role of adiponectin and leptin in the development of type 1 and type 2 diabetes and discuss their potential use as tools in the differential diagnosis of pediatric diabetes.