Lipid homeostasis in adipose tissue is a critical determinant of whole body metabolism. When the efficiency with which adipocytes store or release triglycerides is perturbed, lipids accumulate in non-adipocytes, impairing systemic metabolism and altering the function of key tissues, including liver, heart, skeletal muscle and pancreas. Despite our understanding of canonical pathways that regulate lipolysis and lipogenesis in adipocytes, the factors that contribute to lipid homeostasis in adipose tissue are incompletely defined. In our efforts to understand non- inflammatory function of immune cells in adipose tissue, we have recently discovered that in addition to canonical release of lipids via neutral lipases, adipocytes release lipid in triglyceride-rich exosomes which are taken up by adipose tissue macrophages (ATMs) and catabolized in lysosomes. Studies supported by this grant originally identified immune cells, and in particular macrophages, as important components of adipose tissue that respond to and contribute to adipocyte function. Since these original observations most studies have focused on the inflammatory roles of immune cells and how they can impair insulin signaling, and thereby perturb systemic lipid and carbohydrate metabolism. We have hypothesized that ATMs have adaptive functions necessary for normal adipose tissue metabolism and indeed, others have shown that ATMs participate in adipose tissue differentiation, thermogenesis and vascularization. During the current funding cycle we found that obesity increases not only the number of ATMs but their uptake and lysosomal-dependent catabolism of neutral lipid. As we investigated the source of ATM lipid, we found not unexpectedly nearly all the lipid is adipocyte derived. However, surprisingly lipid accumulation in ATMs does not require the canonical lipolytic pathway mediated by neutral lipases. Instead, adipocytes release triglyceride-rich exosomes that both provide lipid to and induce differentiation of ATMs. This establishes exosomes as components of adipose tissue lipid metabolism and regulators of immune function. Based on our preliminary data and previous clinical and murine studies, we propose that adipocyte-derived exosomes and ATMs are necessary components in a lipid cycle required for normal adipose tissue maintenance and function. The work proposed in this application will characterize these exosomes, how they affect ATM recruitment and differentiation, and whether local lysosomal hydrolysis of lipid by ATMs is required to prevent lipoatrophy.