Fatty liver is closely related to the development of the insulin resistance syndrome that largely results from abnormal insulin signaling in three major organs: (i) skeletal muscle in which insulin sensitivity depends on fat content and metabolic activity (exercise); (ii) adipose tissue, which serves as a reservoir of energy in the form of triglycerides; and (iii) the liver, which variably serves as a source or storage site of carbohydrates and lipids. In many respects, the fatty liver resembles a mixture of brown adipose tissue (microvesicular steatosis) and white adipose tissue (macrovesicular steatosis) including the stages of fatty droplet accumulation, and the expression of uncoupling proteins and perilipin-like substances. Furthermore, the development of an inflammatory infiltrate and the increased production of cytokines as occurs in adipose tissue, suggest that the liver in some individuals serves as an extension of adipose tissue. Moreover, current evidence indicates that these morphological changes represent altered gene expression similar to that of adipocytes. However, fatty liver does not appear to be a uniform feature of the metabolic syndrome and there is substantial variation in humans in the development of fatty liver independent of insulin resistance. In this regard, the variable development of fatty liver in Palmipedes (migratory fowl) and its close relationship to skeletal muscle utilization of fatty acids, lipoprotein metabolism and thermoregulation are instructive. The predilection to non-alcoholic fatty liver disease among some varieties of Palmipedes suggests that the development of fatty liver represents an adaptive process, closely integrated with skeletal muscle fat utilization and adipose tissue distribution, and facilitates survival in a very cold, resource-scarce environment. Variation in human populations with metabolic syndrome likewise suggests that the trait evolved in populations exposed in ancient times to different environmental challenges and, because the liver plays a central role in lipid metabolism, the presence or absence of fatty liver is likely to be integrated with insulin sensitivity in other target organs and with lipoprotein metabolism.