Glucocorticoids have a major role in determining adipose tissue metabolism and distribution. 11beta-hydroxysteroid dehydrogenase type 1 (11betaHSD1) is a NADPH-dependent enzyme highly expressed in the liver and adipose tissue. In most intact cells and tissues it functions as a reductase (to convert inactive cortisone to active cortisol). It has been hypothesized that tissue-specific deregulation of cortisol metabolism may be involved in the complex pathophysiology of the metabolic syndrome (MS) and obesity. Transgenic mice overexpressing 11betaHSD1 in adipose tissue develop obesity with all features of the MS, whereas 11betaHSD1-knockout mice are protected from both. The bulk of evidences points to an overexpression and increased activity of 11betaHSD1 also in human adipose tissue. However, 11betaHSD1 seems to adjust local cortisol concentrations independently of its plasma levels. In Cushing's syndrome, 11betaHSD1 is downregulated and may not be responsible for the abdominal fat depots; it also undergoes downregulation in response to weight loss in human obesity. The nonselective 11betaHSD1 inhibitor carbenoxolone improves insulin sensitivity in humans, and selective inhibitors enhance insulin action in diabetic mice liver, thereby lowering blood glucose. Thus, 11betaHSD1 is now emerging as a modulator of energy partitioning and a promising pharmacological target to treat the MS and diabetes.