Type 2 diabetes is preceded by the development of insulin resistance, in which the action of insulin is impaired, largely in skeletal muscles. Caveolin-3 (Cav3) is a muscle-specific subtype of caveolin, an example of a scaffolding protein found within membranes. Cav is also known as growth signal inhibitor, although it was recently demonstrated that the genetic disruption of Cav3 did not augment growth in mice. We found, however, that the lack of Cav3 led to the development of insulin resistance, as exemplified by decreased glucose uptake in skeletal muscles, impaired glucose tolerance test performance, and increases in serum lipids. Such impairments were markedly augmented in the presence of streptozotocin, a pancreatic beta cell toxin, suggesting that the mice were susceptible to severe diabetes in the presence of an additional risk factor. Insulin-stimulated activation of insulin receptors and downstream molecules, such as IRS-1 and Akt, was attenuated in the skeletal muscles of Cav3 null mice, but not in the liver, without affecting protein expression or subcellular localization. Genetic transfer of Cav3 by needle injection restored insulin signaling in skeletal muscles. Our findings suggest that Cav3 is an enhancer of insulin signaling in skeletal muscles but does not act as a scaffolding molecule for insulin receptors.