INT131 is a potent non-thiazolidinedione (TZD)-selective peroxisome proliferator-activated receptor-γ modulator being developed for the treatment of type 2 diabetes. In preclinical studies and a phase II clinical trial, INT131 has been shown to lower glucose levels and ameliorate insulin resistance without typical TZD side effects. To determine whether the insulin-sensitizing action of INT131 is mediated by effects on insulin-mediated glucose homeostasis and insulin signaling, high-fat diet-induced obese (DIO) insulin-resistant mice treated with INT131 were studied. INT131's effects on bone density were also investigated. Treatment with INT131 enhanced systemic insulin sensitivity, as revealed by lower insulin levels in the fasted state and an increase in the area above the curve during an insulin tolerance test. These effects were independent of changes in adiposity. Insulin-stimulated PI3K activity in skeletal muscle and adipose tissue of DIO mice was significantly reduced ∼50-65%, but this was restored completely by INT131 therapy. The INT131 effects on PI3K activity are most likely due to increased IRS-1 tyrosine phosphorylation. Concurrently, insulin-mediated Akt phosphorylation also increased after INT131 treatment in DIO mice. Importantly, INT131 therapy caused a significant increase in bone mineral density without alteration in circulating osteocalcin in these mice. These data suggest that a newly developed insulin-sensitizing agent, INT131, normalizes obesity-related defects in insulin action on PI3K signaling in insulin target tissues by a mechanism involved in glycemic control. If these data are confirmed in humans, INT131 could be used for treating type 2 diabetes without loss in bone mass.