WY14,643 is a specific peroxisome proliferator-activated receptor α (PPARα) agonist with strong hypolipidemic effects. Here we have examined the effect of WY14,643 in the A-ZIP/F-1 mouse, a model of severe lipoatrophic diabetes. With 1 week of treatment, all doses of WY14,643 that were tested normalized serum triglyceride and fatty acid levels. Glucose and insulin levels also improved but only with high doses and longer treatment duration. WY14,643 reduced liver and muscle triglyceride content and increased levels of mRNA encoding fatty acid oxidation enzymes. In liver, the elevated lipogenic mRNA profile (including PPARγ) in A-ZIP/F-1 mice remained unchanged. These results suggest that WY14,643 acts by increasing β-oxidation rather by than decreasing lipogenesis or lipid uptake. Hyperinsulinemic euglycemic clamp studies indicated that WY14,643 treatment improved liver more than muscle insulin sensitivity and that hepatic mRNA levels of gluconeogenic enzymes were reduced. Combination treatment with both WY14,643 and a PPARγ ligand, rosiglitazone, did not lower glucose levels more effectively than did treatment with WY14,643 alone. These data support the hypothesis that reducing intracellular triglycerides in non-adipose tissues improves insulin sensitivity and suggest that further investigation of the role of PPARα agonists in the treatment of lipoatrophic diabetes is warranted.