The present study was designed to assess the potential of supplementation of diet with Flaxseed (Linum usitatissimum, L.) oil (FXO), on obesity-related inflammation and reversal of obesity-induced insulin resistance. Swiss Albino mice, C57bl/6 mice and co-culture of 3T3-L1 adipocytes - RAW 264.7 macrophages to mimick obese adipose tissue environment were used for the study. Oral gavage of FXO at concentrations of 4, 8 or 16 mg/kg body weight (bwt) for 4 weeks or high-fat diet (HFD, 60% energy as fat) supplemented with dietary FXO (4, 8 or 16 mg/kg bwt) was given to the mice. FXO was characterised using gas chromatography - mass spectrometry. FXO supplemented HFD-fed mice (4 mg/kg bwt exhibited reduced adiposity index, serum glucose levels and triglycerides (8 and 16 mg/kg bwt) and improvement in insulin sensitisation (4, 8 and 16 mg/kg bwt) when compared with HFD mice. The co-culture showed a dose-dependent shift in cytokines towards anti-inflammatory (IL-4) state, with a decrease in pro-inflammatory TNF-α (p < 0.05). For immunomodulatory studies a dose-dependent increase (p < 0.05) was observed in antigen-specific levels of Th2 (IL-4) cytokine, serum anti-ova IgG1 and IgE levels. Suppression in anti-ova IgG2a, IgG2b, and IgG3 and antigen-specific Th1 cytokines like TNF-α and IFN-γ significantly (p < 0.05) was observed at 16 mg/kg bwt dosage. The results indicate that FXO exhibits an anti-inflammatory immunomodulatory potential and may partially relieve symptoms of obesity-associated insulin resistance.