Accumulation of ectopic fat is strongly related to risk of type 2 diabetes and cardiovascular disease. One of the most important fat depots in this context is perivascular adipose tissue (PVAT), which is situated around most blood vessels with a diameter >100 microns. In organs such as adipose tissue, muscles and the heart, PVAT associates with resistance arteries, suggesting a role in (dys)regulation of perfusion of these tissues. As perfusion is a determinant of local glucose metabolism, PVAT control of tissue perfusion may also contribute to regulation of insulin sensitivity. In recent years, PVAT around resistance arteries has been found to induce vasodilatation by direct relaxing effects on smooth muscle and enhancement of vasodilatation induced by insulin and acetylcholine. These vasodilator properties of PVAT are mediated by a variety of bioactive substances (adipokines) such as adiponectin and inflammatory mediators. In human and experimental obesity, hypertension and Western diet exposure, impaired vasodilator properties of PVAT have been observed. This is triggered by infiltration of inflammatory cells such as macrophages in PVAT and, in muscle, associates with reduced perfusion. In conclusion, vasoregulation in resistance arteries by PVAT contributes to regulation of local perfusion and metabolism, and impairment of this function of PVAT may be a novel mechanism underlying insulin resistance and target organ damage in type 2 diabetes.