The liver X receptors (LXRalpha and beta) are nuclear receptors that coordinate carbohydrate and lipid metabolism. Treatment of insulin-resistant mice with synthetic LXR ligands enhances glucose tolerance, inducing changes in gene expression expected to decrease hepatic gluconeogenesis (via indirect suppression of gluconeogenic enzymes) and increase peripheral glucose disposal (via direct up-regulation of glut4 in fat). To evaluate the relative contribution of each of these effects on whole-body insulin sensitivity, we performed hyperinsulinemic-euglycemic clamps in high-fat-fed insulin-resistant rats treated with an LXR agonist or a peroxisome proliferator-activated receptor gamma ligand. Both groups showed significant improvement in insulin action. Interestingly, rats treated with LXR ligand had lower body weight and smaller fat cells than controls. Insulin-stimulated suppression of the rate of glucose appearance (Ra) was pronounced in LXR-treated rats, but treatment failed to enhance peripheral glucose uptake (R'g), despite increased expression of glut4 in epididymal fat. To ascertain whether LXR ligands suppress hepatic gluconeogenesis directly, mice lacking LXRalpha (the primary isotype in liver) were treated with LXR ligand, and gluconeogenic gene expression was assessed. LXR activation decreased expression of gluconeogenic genes in wild-type and LXRbeta null mice, but failed to do so in animals lacking LXRalpha. Our observations indicate that despite inducing suggestive gene expression changes in adipose tissue in this model of diet-induced insulin resistance, the antidiabetic effect of LXR ligands is primarily due to effects in the liver that appear to require LXRalpha. These findings have important implications for clinical development of LXR agonists as insulin sensitizers.