Adipose tissue is a critical mediator in obesity-induced insulin resistance. Previously we have demonstrated that pharmacological lowering of glycosphingolipids and subsequently GM3 by using the iminosugar AMP-DNM, strikingly improves glycemic control. Here we studied the effects of AMP-DNM on adipose tissue function and inflammation in detail to provide an explanation for the observed improved glucose homeostasis. Leptin-deficient obese (Lep(Ob)) mice were fed AMP-DNM and its effects on insulin signalling, adipogenesis and inflammation were monitored in fat tissue. We show that reduction of glycosphingolipid biosynthesis in adipose tissue of Lep(Ob) mice restores insulin signalling in isolated ex vivo insulin-stimulated adipocytes. We observed improved adipogenesis as the number of larger adipocytes was reduced and expression of genes like peroxisome proliferator-activated receptor (PPAR) gamma, insulin responsive glucose transporter (GLUT)-4 and adipsin increased. In addition, we found that adiponectin gene expression and protein were increased by AMP-DNM. As a consequence of this improved function of fat tissue we observed less inflammation, which was characterized by reduced numbers of adipose tissue macrophages (crown-like structures) and reduced levels of the macrophage chemo attractants monocyte-chemoattractant protein-1 (Mcp-1/Ccl2) and osteopontin (OPN). In conclusion, pharmacological lowering of glycosphingolipids by inhibition of glucosylceramide biosynthesis improves adipocyte function and as a consequence reduces inflammation in adipose tissue of obese animals.