Objective: The objective of this study was to analyze how fat partitioning in the liver, muscle and visceral compartments is altered by diabetes and age, and whether altered fat distribution is associated with a higher carotid artery intima-media thickness (C-IMT) and insulin resistance. Methods: This was an observational study performed on 21 young healthy men (mean age±s.d., 28.6±3.8 years) and 73 men with newly developed type 2 diabetes (38 young (29.2 ± 4.1 years) and 35 middle-aged (47.1 ± 6.0 years) subjects). Abdominal visceral and subcutaneous fat areas, mid-thigh muscle attenuation and liver attenuation characteristics were determined; the mid-thigh muscle was divided into low-and normal-density muscle areas. Results: The young and middle-aged diabetic subjects had higher visceral fat areas, higher liver attenuation and higher lipid-rich muscle (greater low-density muscle area and decreased muscle attenuation) when compared with healthy individuals; however, no differences were observed between the two diabetic groups. In contrast, the C-IMT increased with both age and diabetes. On the basis of multiple regression analyses, mid-thigh low-density muscle area and muscle attenuation were independently associated with the C-IMT, and the mid-thigh normal-density muscle area and muscle attenuation were independent factors of insulin resistance. Conclusions: High fat stores within ectopic compartments were observed at an early stage in the development of diabetes. Furthermore, altered lipid partitioning within muscle was independently associated with carotid atherosclerosis and insulin resistance.