Obesity is a major driver of type 2 diabetes (T2D) and related metabolic disorders, characterized by chronic inflammation and adipocyte dysfunction. However, the molecular triggers initiating these processes remain poorly understood. We identified FAM20C, a serine/threonine kinase, as an early obesity-induced mediator of adipocyte dysfunction. Fam20c expression was substantially upregulated in adipocytes in response to obesity, correlating with a proinflammatory transcriptional signature. Forced expression of Fam20c in adipocytes promoted robust upregulation of proinflammatory cytokines and induced insulin resistance that is dependent on its kinase activity. Conversely, deletion of adipocyte Fam20c after established obesity and hyperglycemia improved glucose tolerance, augmented insulin sensitivity, and reduced visceral adiposity, without altering body weight. Phosphoproteomic studies revealed that FAM20C regulates phosphorylation of intracellular and secreted proteins, modulating pathways critical to inflammation, metabolism, and ECM remodeling. We identified FAM20C-dependent substrates, such as CNPY4, whose phosphorylation contributes to proinflammatory adipocyte signaling. Of translational relevance, we showed that in humans, visceral adipose FAM20C expression positively correlates with insulin resistance. Our findings establish FAM20C as an early regulator of obesity-induced adipocyte dysfunction and systemic metabolic impairment. Our studies provide proof of concept that inhibition of FAM20C may serve as a potential therapy for T2D by restoring adipocyte health.