Adipose tissue (AT) inflammation and excessive lipolysis predispose transition cows to metabolic disorders. In human and rodent AT, lipopolysaccharide (LPS) has been shown to trigger inflammatory responses and lipolysis and reduce insulin sensitivity (IS). The effect of LPS on lipolysis and IS in AT of dairy cows during the transition period has not been determined. We hypothesized that LPS triggers lipolysis and reduces IS in AT of transition dairy cows. Subcutaneous AT (SCAT) explants were collected from 12 Holstein dairy cows at −14 d prepartum and +6 d and +12 d after calving. Explants were incubated in the presence of LPS (CON = 0 µg/mL medium or LPS = 20 µg/mL medium). The effect of LPS on stimulated lipolysis was determined using isoproterenol (ISO = 1uM) and LPS plus isoproterenol (LPSISO) The impact of LPS on the anti-lipolytic responses induced by insulin at high (1µL/L, LPS-IH) and low (0.2µL/L, LPS-IL) concentrations was determined by comparing it to the effect of insulin on lipolysis during ISO stimulation (ISO-IH; ISO-IL). Lipolysis was determined by quantification of glycerol release. Statistical analyses were performed using a mixed effect linear model. Compared with CON, LPS increased glycerol release from SCAT by 73 ± 18% across all time points (P < 0.001) and tended (P = 0.09) to be affected by time relative to parturition with higher release of glycerol at −14 d (87 ± 2%) compared with +6 d (70 ± 2%) and +12 d (63 ± 2%). LPSISO increased the lipolytic response by 40 ± 17% compared with ISO (P < 0.05) and 255 ± 37% compared with CON (P < 0.001). Compared with ISO-IH, LPS-IH reduced the antilipolytic effect of insulin by 9 ± 2% (P < 0.05). No differences were observed between ISO-IL and LPS-IL. Our results demonstrate that LPS reduces IS and triggers lipolysis in SCAT. LPS also potentiates SCAT lipolytic response to adrenergic agonists. Collectively our results suggest that in diseases where plasma levels of LPS are increased, the lipolytic response of AT may be exacerbated through activation of lipolytic pathways and inhibition of the anti-lipolityc effects of insulin by LPS.