With the increasing prevalence of type 2 diabetes and fatty liver disease, there is still an unmet need to better treat hyperglycemia and hyperlipidemia. Here, we identify isthmin-1 (Ism1) as an adipokine and one that has a dual role in increasing adipose glucose uptake while suppressing hepatic lipid synthesis. Ism1 ablation results in impaired glucose tolerance, reduced adipose glucose uptake, and reduced insulin sensitivity, demonstrating an endogenous function for Ism1 in glucose regulation. Mechanistically, Ism1 activates a PI3K-AKT signaling pathway independently of the insulin and insulin-like growth factor receptors. Notably, while the glucoregulatory function is shared with insulin, Ism1 counteracts lipid accumulation in the liver by switching hepatocytes from a lipogenic to a protein synthesis state. Furthermore, therapeutic dosing of recombinant Ism1 improves diabetes in diet-induced obese mice and ameliorates hepatic steatosis in a diet-induced fatty liver mouse model. These findings uncover an unexpected, bioactive protein hormone that might have simultaneous therapeutic potential for diabetes and fatty liver disease. Display omitted •The secreted protein ISM1 increases adipocyte glucose uptake•ISM1 ablation impairs basal and insulin-induced glucose uptake by adipocytes•ISM1 suppresses hepatocyte lipid synthesis while increasing protein synthesis•Therapeutic administration of recombinant ISM1 improves diabetes and hepatic steatosis Here, Jiang et al. describe the discovery of isthmin-1 (ISM1) as an adipose-secreted polypeptide hormone. ISM1 has dual roles in increasing adipocyte glucose uptake while suppressing hepatic lipid synthesis, thus improving hyperglycemia and reducing lipid accumulation in mouse models. ISM1, therefore, may offer a new therapeutic opportunity to simultaneously treat diabetes and fatty liver disease.