Lipodystrophies are characterized by a loss of white adipose tissue, which causes ectopic lipid deposition, peripheral insulin resistance, reduced adipokine levels, and increased food intake (hyperphagia). The growth factor myostatin (MSTN) negatively regulates skeletal muscle growth, and mice with MSTN inhibition have reduced adiposity and improved insulin sensitivity. MSTN inhibition may therefore be efficacious in ameliorating diabetes. To test this hypothesis, we inhibited MSTN signaling in a diabetic model of generalized lipodystrophy to analyze its effects on glucose metabolism separate from effects on adipose mass. A-ZIP/F1 lipodystrophic mice were crossed to mice expressing a dominant-negative MSTN receptor (activin receptor type IIB) in muscle. MSTN inhibition in A-ZIP/F1 mice reduced blood glucose, serum insulin, triglyceride levels, and the rate of triglyceride synthesis, and improved insulin sensitivity. Unexpectedly, hyperphagia was normalized by MSTN inhibition in muscle. Blood glucose and hyperphagia were reduced in double mutants independent of the adipokine leptin. These results show that the effect of MSTN inhibition on insulin sensitivity is not secondary to an effect on adipose mass and that MSTN inhibition may be an effective treatment for diabetes. These results further suggest that muscle may play a heretofore unappreciated role in regulating food intake.