The clinical implication of Lipotoxicity in obesity derives primarily from its potential to progress to insulin resistance, endothelial dysfunction and atherosclerosis. Olive oil rich diet decrease accumulation of triglyceride in the liver, improved postprandial triglyceride levels, improve glucose and GLP-1 response in insulin resistant subjects, and up regulate GLUT-2 expression in the liver. The exact molecular mechanism is unknown but, decreasing NFkB activation, decreasing LDL oxidation and improving insulin resistance by less production of inflammatory cytokines (TNF-a, IL-6) and improvement of kinases JNK-mediated phosphorylation of IRS-1 are the principle mechanisms. The beneficial effect of the Mediterranean diet derived from monounsaturated fatty acids (MUFA), mainly from olive oil. In this review we document lipotoxicity in obesity and the benefit of olive oil.