Adipose tissue cell number and size were determined in ten juvenile diabetics, ages one to seventeen, four of whom had a history of significant obesity antedating development of symptomatic glucosuria. Studies were performed at the time of diagnosis (before administration of insulin) and two to twenty-five months after institution of therapy. Results were compared with those found in a group of thirtyfour children of normal weight with no blood sugar abnormalities. An increase in adipose cell number was documented while adipose cell size was significantly decreased in the diabetics in both study periods. Weight gain after insulin treatment was due primarily to an increase in total body fat, which was reflected by increased cell size. However, the cells were still significantly smaller than normal. Cell number was not increased by the insulin treatment. In vitro studies of glycerol release revealed blunting of epinephrine-stimulated lipolysis, compatible with diminished adenylcyclase or cyclic AMP activity. However, the effects of in vitro insulin upon glycerol release and upon conversion of glucose l-C-14 to 14-CO2 did not differ from results in normal controls. Baseline values of glycerol release were related to the presence of acidosis, while hormonal responses were unchanged after therapy. Thus, adipose tissue hypercellularity is present at the time of diagnosis of insulin-requiring diabetes mellitus in children and is not accompanied by adipose tissue peripheral “insulin resistance” as measured by two different parameters. A possible role for growth hormone in the development of this hypercellularity, which is also present in childhood obesity, is presented.