The antidiabetic potential of glucagon receptor antagonism presents an opportunity for use in an insulin-centric clinical environment. To investigate the metabolic effects of glucagon receptor antagonism in type 2 diabetes, we treated Lepr^db/db and Lep^ob/ob mice with REMD 2.59, a human monoclonal antibody and competitive antagonist of the glucagon receptor. As expected, REMD 2.59 suppresses hepatic glucose production and improves glycemia. Surprisingly, it also enhances insulin action in both liver and skeletal muscle, coinciding with an increase in AMP-activated protein kinase (AMPK)-mediated lipid oxidation. Furthermore, weekly REMD 2.59 treatment over a period of months protects against diabetic cardiomyopathy. These functional improvements are not derived simply from correcting the systemic milieu; nondiabetic mice with cardiac-specific overexpression of lipoprotein lipase also show improvements in contractile function after REMD 2.59 treatment. These observations suggest that hyperglucagonemia enables lipotoxic conditions, allowing the development of insulin resistance and cardiac dysfunction during disease progression.