Adipose tissue (AT) expansion is accompanied by the infiltration and accumulation of AT macrophages (ATMs), as well as a shift in ATM polarization. Several studies have implicated recruited M1 ATMs in the metabolic consequences of obesity; however, little is known regarding the role of alternatively activated resident M2 ATMs in AT homeostasis or how their function is altered in obesity. Herein, we report the discovery of a population of alternatively activated ATMs with elevated cellular iron content and an iron-recycling gene expression profile. These iron-rich ATMs are referred to as MFe(hi), and the remaining ATMs are referred to as MFe(lo). In lean mice, ~25% of the ATMs are MFe(hi); this percentage decreases in obesity owing to the recruitment of MFe(lo) macrophages. Similar to MFe(lo) cells, MFe(hi) ATMs undergo an inflammatory shift in obesity. In vivo, obesity reduces the iron content of MFe(hi) ATMs and the gene expression of iron importers as well as the iron exporter, ferroportin, suggesting an impaired ability to handle iron. In vitro, exposure of primary peritoneal macrophages to saturated fatty acids also alters iron metabolism gene expression. Finally, the impaired MFe(hi) iron handling coincides with adipocyte iron overload in obese mice. In conclusion, in obesity, iron distribution is altered both at the cellular and tissue levels, with AT playing a predominant role in this change. An increased availability of fatty acids during obesity may contribute to the observed changes in MFe(hi) ATM phenotype and their reduced capacity to handle iron.