Leptin has metabolic effects on peripheral tissues including muscle, liver, and pancreas, and it has been successfully used to treat lipodystrophic diabetes, a leptin-deficient state. To study whether leptin therapy can be used for treatment of more common cases of type 2 diabetes, we used a mouse model of type 2 diabetes (MKR mice) that show normal leptin levels and are diabetic due to a primary defect in both IGF-I and insulin receptors signaling in skeletal muscle. Here we show that leptin administration to the MKR mice resulted in improvement of diabetes, an effect that was independent of the reduced food intake. The main effect of leptin therapy was enhanced hepatic insulin responsiveness possibly through decreasing gluconeogenesis. In addition, the reduction of lipid stores in liver and muscle induced by enhancing fatty acid oxidation and inhibiting lipogenesis led to an improvement of the lipotoxic condition. Our data suggest that leptin could be a potent antidiabetic drug in cases of type 2 diabetes that are not leptin resistant.