Despite the lipolysis-lipogenesis cycle being a fundamental process in adipocyte biology, very little is known about the morphological changes that occur during this process. The remodeling of lipid droplets to form micro lipid droplets (mLDs) is a striking feature of lipolysis in adipocytes, but once lipolysis ceases, the cell must regain its basal morphology. We characterized mLD formation in cultured adipocytes, and in primary adipocytes isolated from mouse epididymal fat pads, in response to acute activation of lipolysis. Using real-time quantitative imaging and electron tomography, we show that formation of mLDs in cultured adipocytes occurs throughout the cell to increase total LD surface area by 30 but does not involve detectable fission from large LDs. Peripheral mLDs are monolayered structures with a neutral lipid core and are sites of active lipolysis. Electron tomography reveals preferential association of mLDs with the endoplasmic reticulum. Treatment with insulin and fatty acids results in the reformation of macroLDs and return to the basal state. Insulin-dependent reformation of large LDs involves two distinct processes: microtubule-dependent homotypic fusion of mLDs and expansion of individual mLDs. We identify a physiologically important role for LD fusion that is involved in a reversible lipolytic cycle in adipocytes.