In contrast to the class I phosphoinositide 3-kinases (PI3Ks), the organismal roles of the kinase activity of the class II PI3Ks are less clear. Here, we report that class II PI3K-C2β kinase-dead mice are viable and healthy but display an unanticipated enhanced insulin sensitivity and glucose tolerance, as well as protection against high-fat-diet-induced liver steatosis. Despite having a broad tissue distribution, systemic PI3K-C2β inhibition selectively enhances insulin signaling only in metabolic tissues. In a primary hepatocyte model, basal PI3P lipid levels are reduced by 60% upon PI3K-C2β inhibition. This results in an expansion of the very early APPL1-positive endosomal compartment and altered insulin receptor trafficking, correlating with an amplification of insulin-induced, class I PI3K-dependent Akt signaling, without impacting MAPK activity. These data reveal PI3K-C2β as a critical regulator of endosomal trafficking, specifically in insulin signaling, and identify PI3K-C2β as a potential drug target for insulin sensitization.