Adiponectin is an adipocyte-secreted, insulin-sensitizing hormone the circulating levels of which are reduced in conditions of insulin resistance and diabetes. Previous work has demonstrated the importance of posttranslational modifications, such as proline hydroxylation and lysine hydroxylation/glycosylation, in adiponectin oligomerization, secretion, and function. Here we describe the first functional characterization of adiponectin sialylation. Using a variety of biochemical approaches we demonstrated that sialylation occurs on previously unidentified O-linked glycans on Thr residues of the variable domain in human adiponectin. Enzymatic removal of sialic acid or its underlying O-linked sugars did not affect adiponectin multimer composition. Expression of mutant forms of adiponectin (lacking the modified Thr residues) or of wild-type adiponectin in cells defective in sialylation did not compromise multimer formation or secretion, arguing against a structural role for this modification. Activity of desialylated adiponectin was comparable to control adiponectin in L6 myotubes and acute assays in adiponectin(-/-) mice. In contrast, plasma clearance of desialylated adiponectin was accelerated compared with that of control adiponectin, implicating a role for this modification in determining the half-life of circulating adiponectin. Uptake of desialylated adiponectin by isolated primary rat hepatocytes was also accelerated, suggesting a role for the hepatic asialoglycoprotein receptor. Finally, after chronic administration in adiponectin(-/-) mice steady-state levels of desialylated adiponectin were lower than control adiponectin and failed to recapitulate the improvements in glucose and insulin tolerance tests observed with control adiponectin. These data suggest an important role for sialic acid content in the regulation of circulating adiponectin levels and highlight the importance of understanding mechanisms regulating adiponectin sialylation/desialylation.