Adipose tissues provide circulating nutrients and hormones. We present in vivo mouse studies highlighting roles for Wnt signals in both aspects of metabolism. β-catenin activation in PPARγ–expressing fat progenitors (PBCA) decreased fat mass and induced fibrotic replacement of subcutaneous fat specifically. In spite of lipodystrophy, PBCA mice did not develop the expected diabetes and hepatosteatosis, but rather exhibited improved glucose metabolism and normal insulin sensitivity. Glucose uptake was increased in muscle independently of insulin, associated with cell surface translocation of glucose transporters and AMPK activation. Ex vivo assays showed these effects were likely secondary to blood-borne signals since PBCA sera or conditioned media from PBCA fat progenitors enhanced glucose uptake and activated AMPK in muscle cultures. Thus, adipose progenitor Wnt activation dissociates lipodystrophy from dysfunctional metabolism and highlights a fat-muscle endocrine axis, which may represent a potential therapy to lower blood glucose and improve metabolism.