Obesity is accompanied by numerous systemic and tissue-specific derangements, including systemic inflammation, insulin resistance, and mitochondrial abnormalities in skeletal muscle. Despite growing recognition that adipose tissue dysfunction plays a role in obesity-related disorders, the relationship between adipose tissue inflammation and other pathological features of obesity is not well-understood. We assessed macrophage populations and measured the expression of inflammatory cytokines in abdominal adipose tissue biopsies in 39 non-diabetic adults across a range of body mass indexes (BMI 20.5-45.8 kg/m2). Skeletal muscle biopsies were used to evaluate mitochondrial respiratory capacity, ATP production capacity, coupling, and reactive oxygen species production. Insulin sensitivity (SI) and beta cell responsivity were determined from test meal postprandial glucose, insulin, c-peptide, and triglyceride kinetics. We examined the relationships between adipose tissue inflammatory markers, systemic inflammatory markers, SI, and skeletal muscle mitochondrial physiology. BMI was associated with increased adipose tissue and systemic inflammation, reduced SI, and reduced skeletal muscle mitochondrial oxidative capacity. Adipose-resident macrophage numbers were positively associated with circulating inflammatory markers, including tumor necrosis factor-α (TNFα) and C-reactive protein (CRP). Local adipose tissue inflammation and circulating concentrations of TNFα and CRP were negatively associated with SI, and circulating concentrations of TNFα and CRP were also negatively associated with skeletal muscle oxidative capacity. These results demonstrate that obese humans exhibit increased adipose tissue inflammation concurrently with increased systemic inflammation, reduced insulin sensitivity, and reduced muscle oxidative capacity, and suggest that adipose tissue and systemic inflammation may drive obesity-associated metabolic derangements.