Adiponectin, the most abundant adipose-specific protein, has been found to be negatively associated with degree of adiposity and positively associated with insulin sensitivity in Pima Indians and other populations. Moreover, adiponectin administration to rodents has been shown to increase insulin-induced tyrosine phosphorylation of the insulin receptor (IR) and also increase whole-body insulin sensitivity. To further characterize the relationship between plasma adiponectin concentration and insulin sensitivity in humans, we examined 1) the cross-sectional association between plasma adiponectin concentration and skeletal muscle IR tyrosine phosphorylation and 2) the prospective effect of plasma adiponectin concentration at baseline on change in insulin sensitivity. Fasting plasma adiponectin concentration, body composition (hydrodensitometry or dual energy X-ray absorptiometry), insulin sensitivity (insulin-stimulated glucose disposal, hyperinsulinemic clamp), and glucose tolerance (75-g oral glucose tolerance test) were measured in 55 Pima Indians (47 men and 8 women, aged 31 ± 8 years, body fat 29 ± 8% [mean ± SD]; 50 with normal glucose tolerance, 3 with impaired glucose tolerance, and 2 with diabetes). Group 1 (19 subjects) underwent skeletal muscle biopsies for the measurement of basal and insulin-stimulated tyrosine phosphorylation of the IR (stimulated by 100 nmol/l insulin). The fold increase after insulin stimulation was calculated as the ratio between maximal and basal phosphorylation. Group 2 (38 subjects) had follow-up measurements of insulin-stimulated glucose disposal. Cross-sectionally, plasma adiponectin concentration was positively associated with insulin-stimulated glucose disposal (r = 0.58, P < 0.0001) and negatively associated with percent body fat (r = −0.62, P < 0.0001) in the whole group. In group 1 plasma adiponectin was negatively associated with the basal (r = −0.65, P = 0.003) and positively associated with the fold increase in IR tyrosine phosphorylation (r = 0.69, P = 0.001) before and after the adjustment for percent body fat (r = −0.58, P = 0.01 and r = 0.54, P = 0.02, respectively). Longitudinally, after adjustment for age, sex, and percent body fat, low plasma adiponectin concentration at baseline was associated with a decrease in insulin sensitivity (P = 0.04). In conclusion, our cross-sectional data suggest a role of physiological concentration of fasting plasma adiponectin in the regulation of skeletal muscle IR tyrosine phosphorylation. Prospectively, low plasma adiponectin concentration at baseline precedes a decrease in insulin sensitivity. Our data indicate that adiponectin plays an important role in regulation of insulin sensitivity in humans.