Hepatic insulin resistance affects both carbohydrate and lipid metabolism. It has been proposed that insulin controls these 2 metabolic branches through distinct signaling pathways. FoxO transcription factors are considered effectors of the pathway regulating hepatic glucose production. Here we show that adenoviral delivery of constitutively nuclear forkhead box O1 (FoxO1) to mouse liver results in steatosis arising from increased triglyceride accumulation and decreased fatty acid oxidation. FoxO1 gain of function paradoxically increased insulin sensitivity by promoting Akt phosphorylation, while FoxO1 inhibition via siRNA decreased it. We show that FoxO1 regulation of Akt phosphorylation does not require DNA binding and is associated with repression of the pseudokinase tribble 3 (Trb3), a modulator of Akt activity. This unexpected dual role of FoxO1 in promoting insulin sensitivity and lipid synthesis in addition to glucose production has the potential to explain the peculiar admixture of insulin resistance and sensitivity that is commonly observed in the metabolic syndrome.