In obesity and type 2 diabetes, expression of the GLUT4 glucose transporter is decreased selectively in adipocytes. Adipose-specific Glut4 (also known as Slc2a4) knockout (adipose-Glut4(-/-)) mice show insulin resistance secondarily in muscle and liver. Here we show, using DNA arrays, that expression of retinol binding protein-4 (RBP4) is elevated in adipose tissue of adipose-Glut4(-/-) mice. We show that serum RBP4 levels are elevated in insulin-resistant mice and humans with obesity and type 2 diabetes. RBP4 levels are normalized by rosiglitazone, an insulin-sensitizing drug. Transgenic overexpression of human RBP4 or injection of recombinant RBP4 in normal mice causes insulin resistance. Conversely, genetic deletion of Rbp4 enhances insulin sensitivity. Fenretinide, a synthetic retinoid that increases urinary excretion of RBP4, normalizes serum RBP4 levels and improves insulin resistance and glucose intolerance in mice with obesity induced by a high-fat diet. Increasing serum RBP4 induces hepatic expression of the gluconeogenic enzyme phosphoenolpyruvate carboxykinase (PEPCK) and impairs insulin signalling in muscle. Thus, RBP4 is an adipocyte-derived 'signal' that may contribute to the pathogenesis of type 2 diabetes. Lowering RBP4 could be a new strategy for treating type 2 diabetes.