Skeletal muscle insulin resistance is a major characteristic of obesity and type 2 diabetes. Although obesity-mediated inflammation is causally associated with insulin resistance, the underlying mechanism is unclear. Here, we examined the effects of chronic obesity in mice with muscle-specific overexpression of interleukin-10 (M(IL10)). After 16 weeks of high-fat diet (HFD), M(IL10) mice became markedly obese but showed improved insulin action as compared to wild-type mice, which was largely due to increased glucose metabolism and reduced inflammation in skeletal muscle. Since leptin regulates inflammation, the beneficial effects of interleukin-10 (IL-10) were further examined in leptin-deficient ob/ob mice. Muscle-specific overexpression of IL-10 in ob/ob mice (MCK-IL10(ob/ob)) did not affect spontaneous obesity, but MCK-IL10(ob/ob) mice showed increased glucose turnover as compared to ob/ob mice. Lastly, mice with muscle-specific ablation of IL-10 receptor (M-IL10R(-/-)) were generated to determine whether IL-10 signaling in skeletal muscle is involved in IL-10 effects on glucose metabolism. After HFD, M-IL10R(-/-) mice developed insulin resistance with reduced glucose metabolism as compared to wild-type mice. Overall, these results demonstrate IL-10 effects to attenuate obesity-mediated inflammation and improve insulin sensitivity in skeletal muscle, and our findings implicate a potential therapeutic role of anti-inflammatory cytokine in treating insulin resistance and type 2 diabetes.