Neuropeptide Y (NPY) is one of the most powerful orexigenic peptides, exerting critical feeding related functions in the hypothalamus. However, NPY is also present in extra-hypothalamic nuclei where it is modulated in response to metabolic and other physiological perturbations, but far less is known about these NPY populations and their influence on energy homeostasis. Under conditions of high-fat-diet (HFD) feeding in combination with chronic stress (HFDS), the expression of NPY is robustly upregulated in the central amygdala (CeM) as well as in the arcuate nucleus (Arc), accompanied by an increase in HFD consumption resulting in a significant increase in body fat mass, and a decrease in energy expenditure (EE). To delineate the functional role of CeM-NPY under HFDS condition, we overexpressed NPY specifically in NPY neurons of the CeM in mice. This resulted in increase in food intake and diet-induced EE, subsequently leading to an increase in body fat mass. Importantly, specific ablation of NPY in the neurons of the CeM significantly reduced the obesity-associated phenotype, confirming the importance of NPY in the CeM for the regulation of stress-induced obesity (SIO). Not surprisingly, HFDS-treated mice are also less insulin sensitive with strongly reduced glucose tolerance. Under unstressed situation, insulin reduces the level of NPY in the CeM, which leads to the reduction in food intake in mice, exhibiting an anorectic action. However, our results show that this anorectic action of insulin on the CeM-NPY neurons is impaired under HFDS condition, exaggerating the development of diet-induced obesity. In summary, our data provide important new insights to the contribution of CeM-derived NPY in stress-induced feeding and also identifies the underlying mechanism for the development of obesity under combined high caloric food intake and stressful conditions.