Females are in general more insulin sensitive than males. To investigate if this is a direct effect of sex-steroids (SS) in white adipose tissue (WAT), we developed a male mouse model over expressing the aromatase enzyme, converting testosterone (T) to estradiol (E2), specifically in WAT (Ap2-arom mice). Adipose tissue E2 levels were increased while circulating SS levels were unaffected in male Ap2-arom mice. Importantly, male Ap2-arom mice were more insulin sensitive compared with WT mice and exhibited increased serum adiponectin levels and upregulated expression of Glut4 and Irs1 in WAT. The expression of markers of macrophages and immune cell infiltration was markedly decreased in WAT of male Ap2-arom mice. The adipogenesis was enhanced in male Ap2-arom mice, supported by elevated Pparg expression in WAT and enhanced differentiation of pre-adipocyte into mature adipocytes. In summary, increased adipose tissue aromatase activity reduces adipose tissue inflammation and improves insulin sensitivity in male mice. We propose that estrogen increases insulin sensitivity via a local effect in WAT on adiponectin expression, adipose tissue inflammation, and adipogenesis.