Physical exercise ameliorates metabolic disorders such as type 2 diabetes mellitus and obesity, but the molecular basis of these effects remains elusive. In the present study, we found that exercise up-regulates heparin-binding epidermal growth factor-like growth factor (HB-EGF) in skeletal muscle. To address the metabolic consequences of such gain of HB-EGF function, we generated mice that overexpress this protein specifically in muscle. The transgenic animals exhibited a higher respiratory quotient than did wild-type mice during indirect calorimetry, indicative of their selective use of carbohydrate rather than fat as an energy substrate. They also showed substantial increases in glucose tolerance, insulin sensitivity, and glucose uptake by skeletal muscle. These changes were accompanied by increased kinase activity of Akt in skeletal muscle and consequent inhibition of Forkhead box O1-dependent expression of the pyruvate dehydrogenase kinase 4 gene. Furthermore, mice with a high level of transgene expression were largely protected from obesity, hepatic steatosis, and insulin resistance, even when maintained on a high-fat diet. Our results suggest that HB-EGF produced by contracting muscle acts as an insulin sensitizer that facilitates peripheral glucose disposal.