Protein deacetylase Sirt1 has been implicated in the regulation of hepatic gluconeogenesis; however, the mechanisms are not fully understood. To further elucidate how Sirt1 regulates gluconeogenesis, we took a loss-of-function approach by deleting the coding DNA sequence for the catalytic domain of the Sirt1 gene in the liver of a wild-type mouse (LKO^Sirt1) or a genetic diabetic mouse in which hepatic insulin receptor substrates 1 and 2 are deleted (DKO^Irs1/2). Whereas LKO^Sirt1 mice exhibited normal levels of fasting and fed blood glucose, inactivation of Sirt1 in DKO^Irs1/2 mice (TKO^Irs1/2:Sirt1) reduced blood glucose levels and moderately improved systemic glucose tolerance. Pyruvate tolerance was also significantly improved in TKO^Irs1/2:Sirt1 mice, suggesting that Sirt1 promotes hepatic gluconeogenesis in this diabetic mouse model. To understand why inactivation of hepatic Sirt1 does not alter blood glucose levels in the wild-type background, we searched for a potential cause and found that expression of small heterodimer partner (SHP, encoded by the Nr0b2 gene), an orphan nuclear receptor, which has been shown to suppress the activity of forkhead transcription factor FoxO1, was decreased in the liver of LKO^Sirt1 mice. Furthermore, our luciferase reporter assays and chromatin immunoprecipitation analysis revealed that the Nr0b2 gene is a target of FoxO1, which is also regulated by Sirt1. After the gene is upregulated, Nr0b2 can feed back and repress FoxO1- and Sirt1-activated G6pc and Pdk4 gene expression. Thus, our results suggest that Sirt1 can both positively and negatively regulate hepatic gluconeogenesis through FoxO1 and Nr0b2 and keep this physiological process in control.