OBJECTIVE: Diabetes in Asia constitutes approximately half of the global burden. Although insulin resistance and incidence of type 2 diabetes differ substantially between ethnic groups within Asia, the reasons for these differences are poorly understood. We evaluated to what extent body fatness, adiponectin levels and inflammation mediate the relationship between ethnicity and insulin resistance in an Asian setting. DESIGN: Cross-sectional population-based study. SUBJECTS: In total, 4136 adult Chinese, Malays and Asian Indians residing in Singapore. MEASUREMENTS: Insulin resistance was assessed using homeostasis model assessment (HOMA-IR) and systemic inflammation by C-reactive protein (CRP). Data were analyzed using path analysis. RESULTS: HOMA-IR was highest in Asian Indians, intermediate in Malays and lowest in Chinese (P<0.001). The difference in HOMA-IR between Malays and Chinese disappeared after adjusting for body mass index (BMI). For the comparison of Asian Indians with Chinese, the association between ethnicity and HOMA-IR was mediated by BMI (men: 32.9%; women: 48.5%), BMI-adjusted waist circumference (men: 6.1%; women: 3.5%), and CRP (men: 5.1%; women: 5.6%), and unidentified factors (men: 47.2%; women: 26.5%). Part of the mediating effects of body fatness was indirect through effects of body fatness on CRP and adiponectin concentrations. CONCLUSION: Mediators of ethnic differences in insulin resistance differed markedly depending on the ethnic groups compared. General adiposity explained the difference in insulin resistance between Chinese and Malays, whereas abdominal fat distribution, inflammation and unexplained factors contributed to excess insulin resistance in Asian Indians as compared with Chinese and Malays. These findings suggest that interventions targeting excess weight gain can reduce ethnic disparities in insulin resistance among Asian Indians, Chinese and Malays.