Adiponectin is strongly inversely associated with insulin resistance and type 2 diabetes but its causal role remains controversial. We used a Mendelian randomisation approach to test the hypothesis that adiponectin causally influences insulin resistance and type 2 diabetes. We used genetic variants at the ADIPOQ gene as instruments to calculate a regression slope between adiponectin levels and metabolic traits (up to 31,000 individuals) and a combination of instrumental variables and summary statistics based genetic risk scores to test the associations with gold standard measures of insulin sensitivity (2,969 individuals) and type 2 diabetes (15,960 cases and 64,731 controls). In conventional regression analyses a 1 SD decrease in adiponectin levels was correlated with a 0.31 SD (95%CIs: 0.26-0.35) increase in fasting insulin, a 0.34 SD (0.30-0.38) decrease in insulin sensitivity and a type 2 diabetes odds ratio of 1.75 (95%CIs: 1.47-2.13). The instrumental variable analysis revealed no evidence of a causal association between genetically lower circulating adiponectin and higher fasting insulin (0.02 SD, 95%CI: -0.07, 0.11, N=29,771), nominal evidence of a causal relationship with lower insulin sensitivity (-0.20 SD; 95%CIs: -0.38, -0.02; N=1,860) and no evidence of a relationship with type 2 diabetes (odds ratio 0.94; 95%CIs: 0.75, 1.19; N= 2,777 cases and 13,011 controls). Using the ADIPOQ summary statistics genetic risk scores we found no evidence of an association between adiponectin lowering alleles and insulin sensitivity (effect per weighted adiponectin lowering allele: -0.03 SD, 95%CIs: -0.07, 0.01; N=2,969) or type 2 diabetes (odds ratio per weighted adiponectin lowering allele: 0.99; 95%CIs: 0.95, 1.04; 15,960 cases vs. 64,731 controls). These results do not provide any consistent evidence that interventions aimed at increasing adiponectin levels will improve insulin sensitivity or risk of type 2 diabetes.