The synthetic retinoid Fenretinide (FEN) increases insulin sensitivity in obese rodents and is in early clinical trials for treatment of insulin resistance in obese humans with hepatic steatosis (46). We aimed to determine the physiological mechanisms for the insulin-sensitizing effects of FEN. Wild-type mice were fed a high-fat diet (HFD) with or without FEN from 4–5 wk to 36–37 wk of age (preventive study) or following 22 wk of HF diet-induced obesity (12 wk intervention study). Retinol-binding protein-4 (RBP4) knockout mice were also fed the HFD with or without FEN in a preventive study. FEN had minimal effects on HFD-induced body weight gain but markedly reduced HFD-induced adiposity and hyperleptinemia in both studies. FEN-HFD mice gained epididymal fat but not subcutaneous or visceral fat mass in contrast to HFD mice without FEN. FEN did not have a measurable effect on energy expenditure, food intake, physical activity, or stool lipid content. Glucose infusion rate during hyperinsulinemic-euglycemic clamp was reduced 86% in HFD mice compared with controls and was improved 3.6-fold in FEN-HFD compared with HFD mice. FEN improved insulin action on glucose uptake and glycogen levels in muscle, insulin-stimulated suppression of hepatic glucose production, and suppression of serum FFA levels in HFD mice. Remarkably, FEN also reduced hepatic steatosis. In RBP4 knockout mice, FEN reduced the HFD-induced increase in adiposity and hyperleptinemia. In conclusion, long-term therapy with FEN partially prevents or reverses obesity, insulin resistance, and hepatic steatosis in mice on HFD. The anti-adiposity effects are independent of the RBP4 lowering effect.