Obesity has reached epidemic proportions and its prevalence is climbing. Obesity is characterized by hypertrophied adipocytes with a dysregulated adipokine secretion profile, increased recruitment of inflammatory cells, and impaired metabolic homeostasis that eventually results in the development of systemic insulin resistance, a phenotype of type 2 diabetes. Nitric oxide synthase (NOS) is an enzyme that converts L-arginine to nitric oxide (NO), which functions to maintain vascular and adipocyte homeostasis. Arginase is a ureohydrolase enzyme that competes with NOS for L-arginine. Arginase activity/expression is upregulated in obesity, which results in diminished bioavailability of NO, impairing both adipocyte and vascular endothelial cell function. Given the emerging role of NO in the regulation of adipocyte physiology and metabolic capacity, this review explores the interplay between arginase and NO, and their effect on the development of metabolic disorders, cardiovascular diseases, and mitochondrial dysfunction in obesity. A comprehensive understanding of the mechanisms involved in the development of obesity-induced metabolic and vascular dysfunction is necessary for the identification of more effective and tailored therapeutic avenues for their prevention and treatment.