The nuclear receptors liver X receptor (LXR)α and LXRβ are sensors of cholesterol metabolism and lipid biosynthesis. They have recently been found to be regulators of inflammatory cytokines, suppressors of hepatic glucose production, and involved in different cell-signaling pathways. LXRα is a target gene of the peroxisome proliferator-activated receptor-γ, a target of drugs used in treating elevated levels of glucose seen in diabetes. Furthermore, insulin induces LXRα in hepatocytes, resulting in increased expression of lipogenic enzymes and suppression of key enzymes in gluconeogenesis, including PEPCK. LXR seems to have an important role in the regulation of glucocorticoid action and a role in the overall energy homeostasis suggested by its putative regulatory effect on leptin and uncoupling protein 1. The physiological roles of LXR indicate that it is an interesting potential target for drug treatment of diabetes.