Insulin resistance is often associated with obesity and can precipitate type 2 diabetes. To date, most known approaches that improve insulin resistance must be preceded by the amelioration of obesity and hepatosteatosis. Here, we show that this provision is not mandatory; insulin resistance and hyperglycemia are improved by the modification of hepatic fatty acid composition, even in the presence of persistent obesity and hepatosteatosis. Mice deficient for Elovl6, the gene encoding the elongase that catalyzes the conversion of palmitate to stearate, were generated and shown to become obese and develop hepatosteatosis when fed a high-fat diet or mated to leptin-deficient ob/ob mice. However, they showed marked protection from hyperinsulinemia, hyperglycemia and hyperleptinemia. Amelioration of insulin resistance was associated with restoration of hepatic insulin receptor substrate-2 and suppression of hepatic protein kinase C epsilon activity resulting in restoration of Akt phosphorylation. Collectively, these data show that hepatic fatty acid composition is a new determinant for insulin sensitivity that acts independently of cellular energy balance and stress. Inhibition of this elongase could be a new therapeutic approach for ameliorating insulin resistance, diabetes and cardiovascular risks, even in the presence of a continuing state of obesity.