Chronic white adipose tissue (WAT) inflammation has been recognized as a critical early event in the pathogenesis of obesity-related disorders. This process is characterized by the increased residency of proinflammatory M1 macrophages in WAT. However, the lack of an isogenic human macrophage-adipocyte model has limited biological studies and drug discovery efforts, highlighting the need for human stem cell-based approaches. Here, human induced pluripotent stem cell (iPSC) derived macrophages (iMACs) and adipocytes (iADIPOs) are cocultured in a microphysiological system (MPS). iMACs migrate toward and infiltrate into the 3D iADIPOs cluster to form crown-like structures (CLSs)-like morphology around damaged iADIPOs, recreating classic histological features of WAT inflammation seen in obesity. Significantly more CLS-like morphologies formed in aged and palmitic acid-treated iMAC-iADIPO-MPS, showing the ability to mimic inflammatory severity. Importantly, M1 (proinflammatory) but not M2 (tissue repair) iMACs induced insulin resistance and dysregulated lipolysis in iADIPOs. Both RNAseq and cytokines analyses revealed a reciprocal proinflammatory loop in the interactions of M1 iMACs and iADIPOs. This iMAC-iADIPO-MPS thus successfully recreates pathological conditions of chronically inflamed human WAT, opening a door to study the dynamic inflammatory progression and identify clinically relevant therapies.