The endoplasmic reticulum (ER) is the intra-cellular site, where secreted and membrane proteins are synthesized. ER stress and activation of the unfolded protein response (UPR) contribute to insulin resistance and the development of diabetes in obesity. It was shown previously in hepatocytes that the UPR activates c-jun N-terminal kinase (JNK), which phosphorylates insulin receptor substrate (IRS) proteins on serine residues thereby inhibiting insulin signal transduction. Here we describe how ER stress affects insulin signaling and the biological function of adipocytes. In addition to inhibition of IRS we found that ER stress downregulates the expression of the insulin receptor. Concomitantly, insulin-induced activation of Akt/PKB and of ERK1/2 was strongly inhibited. Ectopic expression of IRS1 or IRS2 strongly counteracted the inhibitory effect of ER stress on insulin signaling while pharmacological inhibition of JNK with SP600125 resulted only in a mild improvement. ER stress decreased the secretion of the adipokines adiponectin and leptin, but strongly increased secretion of IL-6. ER stress inhibited expression and insulin-induced phosphorylation of AS160, reduced lipolysis but did not inhibit glucose transport. Finally, supernatants collected from 3T3-L1 adipocytes undergoing ER stress improved or impaired proliferation when used to condition the culture medium of INS-1E beta-cells dependent on the degree of ER stress. It appears that ER stress in adipocytes might initially lead to changes resembling early prediabetic stages, which at least in part support the regulation of systemic energy homeostasis.