The gene that encodes C1q/TNF-related protein 5 (CTRP5), a secreted protein of the C1q family, is mutated in individuals with late-onset retinal degeneration. CTRP5 is widely expressed outside the eye and also circulates in plasma. Its physiological role in peripheral tissues, however, has yet to be elucidated. Here, we show that Ctrp5 expression is modulated by fasting and refeeding, and by different diets, in mice. Adipose expression of CTRP5 was markedly upregulated in obese and diabetic humans, and in genetic and dietary models of obesity in rodents. Further, human CTRP5 expression in the subcutaneous fat depot positively correlated with BMI. A genetic loss-of-function mouse model was used to address the metabolic function of CTRP5 in vivo. On a standard chow diet, CTRP5-deficient mice had reduced fasting insulin but were otherwise comparable to wild-type littermate controls in body weight and adiposity. However, when fed a high-fat diet, CTRP5-deficient animals had attenuated hepatic steatosis and improved insulin action. Loss of CTRP5 also improved the capacity of chow-fed aged mice to respond to subsequent high-fat feeding, as evidenced by decreased insulin resistance. In cultured adipocytes and myotubes, recombinant CTRP5 treatment attenuated insulin-stimulated AKT phosphorylation. Our results provide the first genetic and physiological evidence for CTRP5 as a negative regulator of glucose metabolism and insulin sensitivity. Inhibition of CTRP5 action may result in the alleviation of insulin resistance associated with obesity and diabetes.