PURPOSE OF REVIEW: This review aims to synthesize recent evidence to clarify the causal and mechanistic roles of lipid metabolism disorders as core drivers of type 2 diabetes mellitus (T2DM), and to summarize emerging therapeutic advances targeting key nodes within pathophysiological cascade, thereby providing an integrated, translational framework for the precision management of T2DM. RECENT FINDINGS: Normoglycemic obese individuals with insulin resistance (IR) frequently exhibit elevated plasma free fatty acids (FFAs), triglycerides (TGs), and low-density lipoprotein cholesterol (LDL-C), alongside reduced high-density lipoprotein cholesterol (HDL-C). These observations indicate that dyslipidemia is not merely a comorbidity but an important early driver of T2DM progression. Lipid metabolism disorders initiate a unifying pathological cascade: ectopic lipid spillover induces systemic IR in the liver and skeletal muscle; lipotoxic stress directly compromises pancreatic β-cell function; and progressive disruption of inter-organ axes, including the gut-adipose-liver axis and brain-periphery axis, further exacerbates systemic metabolic deterioration. Recent evidence supports emerging therapeutic strategies, including traditional medicine-based approaches and interventions targeting lipotoxicity and the gut-brain-liver-fat axis to restore metabolic health. Lipid metabolism disorders are not merely complications of T2DM, but critical drivers of disease progression. Adipose dysfunction acts as the initiating event, triggering a pathological cascade that induces systemic IR, impairs pancreatic β-cell function via lipotoxic intermediates, and disrupts inter-organ communication networks. Targeted interventions along this axis therefore represent a promising strategy for precision therapy.