Sixty-five percent of Americans are over-weight. While the neuroendocrine controls of energy homeostasis are well known, how sensory systems respond to and are impacted by obesity is scantily understood. The main accepted function of the olfactory system is to provide an internal depiction of our external chemical environment, starting from the detection of chemosensory cues. We hypothesized that the system additionally functions to encode internal chemistry via the detection of chemicals that are important indicators of metabolic state. We here uncovered that the olfactory bulb (OB) subserves as an internal sensor of metabolism via insulin-induced modulation of the potassium channel Kv1.3. Using an adult slice preparation of the olfactory bulb, we found that evoked neural activity in Kv1.3-expressing mitral cells is enhanced following acute insulin application. Insulin mediated changes in mitral cell excitability are predominantly due to the modulation of Kv1.3 channels as evidenced by the lack of effect in slices from Kv1.3-null mice. Moreover, a selective Kv1.3 peptide blocker (ShK186) inhibits more than 80% of the outward current in parallel voltage-clamp studies, whereby insulin significantly decreases the peak current magnitude without altering the kinetics of inactivation or deactivation. Mice that were chronically administered insulin using intranasal delivery approaches exhibited either an elevation in basal firing frequency or fired a single cluster of action potentials. Following chronic administration of the hormone, mitral cells were inhibited by application of acute insulin rather than excited. Mice made obese through a diet of ∼32% fat exhibited prominent changes in mitral cell action potential shape and clustering behavior, whereby the subsequent response to acute insulin stimulation was either attenuated or completely absent. Our results implicate an inappropriate neural function of olfactory sensors following exposure to chronic levels of the hormone insulin (diabetes) or increased body weight (obesity).