The mitogen-activated protein kinases (MAPK) play critical roles in the pathogenesis of diabetes and obesity. The MAPKs are inactivated by MAPK phosphatases (MKPs) either in the cytosol or nucleus. Here we show that mice lacking the nuclear-localized MKP, MKP-1 (mkp-1^−/−), have enhanced Erk, p38 MAPK and c-Jun NH₂-terminal kinase (JNK) activities in insulin-responsive tissues as compared with wild-type mice. Although JNK promotes insulin resistance, mkp-1^−/− mice exhibited unimpaired insulin-mediated signaling and glucose homeostasis. We reconciled these results by demonstrating that in mkp-1^−/− mice, JNK activity was increased in the nucleus, but not the cytosol. Significantly, mkp-1^−/− mice are resistant to diet-induced obesity due to enhanced energy expenditure, but succumb to glucose intolerance on a high fat diet. These results suggest that nuclear regulation of the MAPKs by MKP-1 is essential for the management of metabolic homeostasis in a manner that is spatially uncoupled from the cytosolic actions of the MAPKs.