Adipose tissue plays an important role in energy balance and metabolism and is the major target for insulin-sensitizing peroxisome proliferator-activated receptor (PPAR) gamma agonists. The angiotensin II type 1 receptor blocker telmisartan, a partial agonist of PPAR-gamma, has been demonstrated to improve insulin sensitivity. However, there is uncertainty about the sites of its action. Here, we demonstrate that treatment with telmisartan (3 mg/kg p.o.) for 7 weeks decreased plasma glucose levels in oral glucose and insulin tolerance tests and the index of the homeostasis model assessment of insulin resistance in A-ZIP/F-1 transgenic mice, an animal model of lipodystrophy. These effects were accompanied by decreases in circulating triglyceride and fatty acid levels. However, this treatment did not affect body weight and plasma adiponectin, leptin, and corticosterone levels. In A-ZIP/F-1 mouse liver the transcripts encoding PPAR-gamma and its downstream lipogenic genes were highly up-regulated, consistent with increased hepatic triglyceride content and lipid droplet accumulation. Telmisartan reversed these effects and also down-regulated mRNAs encoding gluconeogenic genes. Thus, the present findings are consistent with a novel mode of insulin-sensitizing action of telmisartan, involving an adipose tissue-independent pathway. Telmisartan-elicited down-regulation of hepatic expression of PPAR-gamma-regulated lipogenic genes is associated with amelioration of fatty liver.