Plasma cell membrane glycoprotein-1, or ectonucleotide pyrophosphatase/phosphodieterase (PC-1/ENPP1) has been shown to inhibit insulin signaling in cultured cells in vitro and in transgenic mice in vivo when overexpressed. Furthermore, both genetic polymorphism and increased expression of PC-1 have been reported to be associated with type 2 diabetes in humans. Thus it was proposed that PC-1 inhibition represents a potential strategy for the treatment of type 2 diabetes. However, it has not been proven that suppression of PC-1 expression or inhibition of its function will actually improve insulin sensitivity. We show in the current study that transient overexpression of PC-1 inhibits insulin-stimulated insulin receptor tyrosine phosphorylation in HEK293 cells, while knockdown of PC-1 with siRNA significantly increases insulin-stimulated Akt phosphorylation in HuH7 human hepatoma cells. Adenoviral vector expressing a short hairpin RNA against mouse PC-1 (PC-1shRNA) was utilized to efficiently knockdown PC-1 expression in the livers of db/db mice. In comparison with db/db mice treated with a control virus, db/db mice treated with the PC-1shRNA adenovirus had approximately 80% lower hepatic PC-1 mRNA levels, approximately 30% lower ambient fed plasma glucose, approximately 25% lower fasting plasma glucose, and significantly improved oral glucose tolerance. Taken together, these results demonstrate that suppression of PC-1 expression improves insulin sensitivity in vitro and in an animal model of diabetes, supporting the proposition that PC-1 inhibition is a potential therapeutic approach for the treatment of type 2 diabetes.