The central link between obesity and type 2 diabetes is the development of insulin resistance. To date, it is still not clear whether hyperinsulinemia causes insulin resistance, which underlies the pathogenesis of obesity-associated type 2 diabetes, owing to the sophisticated regulatory mechanisms that exist in the periphery and in the brain. In recent years, accumulating evidence has demonstrated the existence of insulin resistance within the hypothalamus. In this review, we have integrated the recent discoveries surrounding both central and peripheral insulin resistance to provide a comprehensive overview of insulin resistance in obesity and the regulation of systemic glucose homeostasis. In particular, this review will discuss how hyperinsulinemia and hyperleptinemia in obesity impair insulin sensitivity in tissues such as the liver, skeletal muscle, adipose tissue, and the brain. In addition, this review highlights insulin transport into the brain, signaling pathways associated with hypothalamic insulin receptor expression in the regulation of hepatic glucose production, and finally the perturbation of systemic glucose homeostasis as a consequence of central insulin resistance. We also suggest future approaches to overcome both central and peripheral insulin resistance to treat obesity and type 2 diabetes.