Estrogen receptors (ER) are important regulators of metabolic diseases such as obesity and insulin resistance (IR). While ERalpha seems to have a protective role in such diseases, the function of ERbeta is not clear. To characterize the metabolic function of ERbeta, we investigated its molecular interaction with a master regulator of insulin signaling/glucose metabolism, the PPARgamma, in vitro and in high-fat diet (HFD)-fed ERbeta -/- mice (betaERKO) mice. Our in vitro experiments showed that ERbeta inhibits ligand-mediated PPARgamma-transcriptional activity. That resulted in a blockade of PPARgamma-induced adipocytic gene expression and in decreased adipogenesis. Overexpression of nuclear coactivators such as SRC1 and TIF2 prevented the ERbeta-mediated inhibition of PPARgamma activity. Consistent with the in vitro data, we observed increased PPARgamma activity in gonadal fat from HFD-fed betaERKO mice. In consonance with enhanced PPARgamma activation, HFD-fed betaERKO mice showed increased body weight gain and fat mass in the presence of improved insulin sensitivity. To directly demonstrate the role of PPARgamma in HFD-fed betaERKO mice, PPARgamma signaling was disrupted by PPARgamma antisense oligonucleotide (ASO). Blockade of adipose PPARgamma by ASO reversed the phenotype of betaERKO mice with an impairment of insulin sensitization and glucose tolerance. Finally, binding of SRC1 and TIF2 to the PPARgamma-regulated adiponectin promoter was enhanced in gonadal fat from betaERKO mice indicating that the absence of ERbeta in adipose tissue results in exaggerated coactivator binding to a PPARgamma target promoter. Collectively, our data provide the first evidence that ERbeta-deficiency protects against diet-induced IR and glucose intolerance which involves an augmented PPARgamma signaling in adipose tissue. Moreover, our data suggest that the coactivators SRC1 and TIF2 are involved in this interaction. Impairment of insulin and glucose metabolism by ERbeta may have significant implications for our understanding of hormone receptor-dependent pathophysiology of metabolic diseases, and may be essential for the development of new ERbeta-selective agonists.