A ketogenic diet (KD) can induce weight loss and improve glycemic regulation, potentially reducing the risk of developing type 2 diabetes. To elucidate the underlying mechanisms behind these beneficial effects of a KD, we investigated the impact of a KD on organ-specific insulin sensitivity (IS) in skeletal muscle, liver, and adipose tissue. We hypothesized that a KD would increase IS in skeletal muscle. The study included 11 individuals with obesity who underwent a randomized, crossover trial with two three-week interventions: 1) KD and 2) standard diet. Skeletal muscle IS was quantified as the increase in glucose disposal during a hyperinsulinemic-euglycemic clamp (HEC). Hepatic IS and adipose tissue IS were quantified as the relative suppression of endogenous glucose production (EGP) and the relative suppression of palmitate flux during the HEC. The KD led to a 2.2 kg weight loss, increased insulin-stimulated glucose disposal, whereas the relative suppression of EGP during the HEC was similar. In addition, the KD decreased insulin-mediated suppression of lipolysis. In conclusion, a KD increased skeletal muscle IS in individuals with obesity.