Type 2 diabetes (T2D) has reached an epidemic level globally. Most current treatments ameliorate the hyperglycemic symptom of the disease but are not effective in correcting its underlying cause. One important causal factor of T2D is ectopic accumulation of lipids in metabolically sensitive organs such as liver and muscle. Mitochondrial uncoupling, which reduces cellular energy efficiency and increases lipid oxidation, is an appealing therapeutic strategy. The challenge, however, is to discover safe mitochondrial uncouplers for practical use. Niclosamide is an anthelmintic drug approved by the US Food and Drug Administration that uncouples the mitochondria of parasitic worms. Here we show that niclosamide ethanolamine salt (NEN) uncouples mammalian mitochondria at upper nanomolar concentrations. Oral NEN increases energy expenditure and lipid metabolism in mice. It is also efficacious in preventing and treating hepatic steatosis and insulin resistance induced by a high-fat diet. Moreover, it improves glycemic control and delays disease progression in db/db mice. Given the well-documented safety profile of NEN, our study provides a potentially new and practical pharmacological approach for treating T2D.