Type 2 diabetes is characterized by a progressive resistance of peripheral tissues to insulin. Recent data have established the lipid phosphatase SH2 domain-containing inositol phosphatase 2 (SHIP2) as a critical negative regulator of insulin signal transduction. Mutations in the SHIP2 gene are associated with type 2 diabetes. Here, we used hyperglycemic and hyperinsulinemic KKA(y) mice to gain insight into the signaling events and metabolic changes triggered by SHIP2 inhibition in vivo. Liver-specific expression of a dominant-negative SHIP2 mutant in KKA(y) mice increased basal and insulin-stimulated Akt phosphorylation. Protein levels of glucose-6-phosphatase and phosphoenolpyruvate carboxykinase were significantly reduced, and consequently the liver produced less glucose through gluconeogenesis. Furthermore, SHIP2 inhibition improved hepatic glycogen metabolism by modulating the phosphorylation states of glycogen phosphorylase and glycogen synthase, which ultimately increased hepatic glycogen content. Enhanced glucokinase and reduced pyruvate dehydrogenase kinase 4 expression, together with increased plasma triglycerides, indicate improved glycolysis. As a consequence of the insulin-mimetic effects on glycogen metabolism, gluconeogenesis, and glycolysis, the liver-specific inhibition of SHIP2 improved glucose tolerance and markedly reduced prandial blood glucose levels in KKA(y) mice. These results support the attractiveness of a specific inhibition of SHIP2 for the prevention and/or treatment of type 2 diabetes.