Leptin regulates food intake and energy expenditure by activating the long form of the leptin receptor (LepRb). Leptin also regulates glucose homeostasis by improving whole-body insulin sensitivity, but the mechanism remains undefined. Leptin action is mediated by phosphorylation of several tyrosine residues on LepRb. LepRb-Tyr985 plays an important role in the attenuation of LepRb signaling. We determined the contribution of LepRb-Tyr985-mediated signals to leptin action on insulin sensitivity using LepRb-Tyr985 mutant mice (l/l mice). Glucose tolerance and whole-body insulin-mediated glucose utilization were determined in wild-type (+/+) and l/l mice. Glucose tolerance was unaltered between female +/+ and l/l mice but enhanced in the male l/l mice. Serum insulin concentration was decreased at baseline and 15 min after a glucose injection in female l/l vs. +/+ mice (P < 0.05) but unaltered in the male l/l mice. However, basal and insulin-stimulated glucose transport in isolated soleus and extensor digitorum longus muscle was similar between +/+ and l/l mice, indicating skeletal muscle insulin sensitivity in vitro was not enhanced. Moreover, euglycemic-hyperinsulinemic clamps reveal hepatic, rather than peripheral, insulin sensitivity is enhanced in female l/l mice, whereas male l/l mice display both improved hepatic and peripheral insulin sensitivity. In conclusion, signals emanating from leptin receptor Tyr985 control hepatic insulin sensitivity in both female and male l/l mice. Lack of LepRb-Tyr985 signaling enhances whole-body insulin sensitivity partly through increased insulin action on the suppression of hepatic glucose production.