Palmitic Acid esters of Hydroxy Stearic Acids (PAHSAs), bioactive lipids with potent anti-inflammatory and antidiabetic effects, reduce ambient glycemia and improve glucose tolerance and insulin sensitivity in insulin resistant HFD-fed mice. We aimed to determine the mechanisms by which PAHSAs improve insulin sensitivity. We treated chow- and HFD-fed mice with 5-PAHSA (0.1 mg/day) and 9-PAHSA (0.4 mg/day) by SQ osmotic minipumps for 13 weeks. Serum 5-PAHSA levels increased 3.5 fold and 9-PAHSA 2.5 fold in chow-fed mice, while 5-PAHSA levels increased 17 fold and 9-PAHSA 6 fold in HFD-fed mice. PAHSAs had no effect on weight gain or fat mass. We performed hyperinsulinemic euglycemic clamps (2.5 mU/Kg/min insulin infusion rate). PAHSA treatment increased systemic insulin sensitivity in both chow- [glucose infusion rate (GIR): vehicle 13±2 vs. PAHSA 27±4 mg/kg/min] and HFD-fed mice (GIR: vehicle 2±0.5 vs. PAHSA 10±3 mg/kg/min). Endogenous glucose production (EGP) was suppressed 28% by insulin in vehicle-treated mice and 55% in PAHSA-treated mice on chow diet. Remarkably, while insulin failed to suppress EGP in vehicle-treated HFD-fed mice, PAHSA treatment led to a 37% reduction in EGP. PAHSAs also decreased glycemia during a pyruvate tolerance test, indicating that suppression of hepatic gluconeogenesis contributes to the EGP improvement. Mechanistic studies showed that PAHSAs inhibit basal and glucagon-stimulated EGP and reduce cAMP in isolated hepatocytes. This effect is blocked by pertussis toxin indicating it is mediated by Gα/i protein-coupled receptors. PAHSAs also reduce G6pase activity and phosphorylation of CREB in liver. Sum: PAHSAs are systemic insulin sensitizers and augment insulin action on EGP in vivo. In vitro, PAHSAs reduce EGP through a cAMP dependent pathway involving Gα/i protein-coupled receptors. Thus, PAHSAs could be effective antidiabetic agents and the pathways they engage could provide novel drug targets for type 2 diabetes. Disclosure A. Santoro: None. P. Zhou: None. O.D. Peroni: None. I. Syed: None. A.T. Nelson: None. D. Siegel: None. A. Saghatelian: None. B. Kahn: Advisory Panel; Self; Janssen Research & Development. Research Support; Self; Janssen Research & Development. Advisory Panel; Self; Alterna Biotech.