Diabetes and obesity are characterized by insulin resistance and chronic low-grade inflammation. An elevated plasma concentration of lipopolysaccharide (LPS) caused by increased intestinal permeability during diet-induced obesity promotes insulin resistance in mice. Here, we show that LPS induces endoplasmic reticulum (ER) stress and protein levels of P300, an acetyltransferase involved in glucose production. In high-fat diet fed and genetically obese ob/ob mice, P300 translocates from the nucleus into the cytoplasm of hepatocytes. We also demonstrate that LPS activates the transcription factor XBP1 via the ER stress sensor IRE1, resulting in the induction of P300 which, in turn, acetylates IRS1/2, inhibits its association with the insulin receptor, and disrupts insulin signaling. Pharmacological inhibition of P300 acetyltransferase activity by a specific inhibitor improves insulin sensitivity and decreases hyperglycemia in obese mice. We suggest that P300 acetyltransferase activity may be a promising therapeutic target for the treatment of obese patients.Elevated plasma LPS levels have been associated with insulin resistance. Here Cao et al. show that LPS induces ER stress and P300 activity via the XBP1/IRE1 pathway. P300 acetylates IRS1/2 and inhibits its binding with the insulin receptor. The consequent impairment of insulin signaling can be rescued by pharmacological inhibition of P300.