Increased hepatic glucose production is a key pathophysiological feature of type 2 diabetes. Like all other cell types, hepatocytes express many G protein-coupled receptors (GPCRs) that are linked to different functional classes of heterotrimeric G proteins. The important physiological functions mediated by G_s-coupled hepatic glucagon receptors are well-documented. In contrast, little is known about the in vivo physiological roles of hepatocyte GPCRs that are linked to G proteins of the G_q family. To address this issue, we established a transgenic mouse line (Hep-Rq mice) that expressed a G_q-linked designer receptor (Rq) in a hepatocyte-selective fashion. Importantly, Rq could no longer bind endogenous ligands but could be selectively activated by a synthetic drug, clozapine-N-oxide. Clozapine-N-oxide treatment of Hep-Rq mice enabled us to determine the metabolic consequences caused by selective activation of a G_q-coupled GPCR in hepatocytes in vivo. We found that acute Rq activation in vivo led to pronounced increases in blood glucose levels, resulting from increased rates of glycogen breakdown and gluconeogenesis. We also demonstrated that the expression of the V_1b vasopressin receptor, a G_q-coupled receptor expressed by hepatocytes, was drastically increased in livers of ob/ob mice, a mouse model of diabetes. Strikingly, treatment of ob/ob mice with a selective V_1b receptor antagonist led to reduced glucose excursions in a pyruvate challenge test. Taken together, these findings underscore the importance of G_q-coupled receptors in regulating hepatic glucose fluxes and suggest novel receptor targets for the treatment of type 2 diabetes.