Aims/hypothesis Myostatin-null mice (Mstn−/−) have reduced body fat and increased tolerance to glucose. To date the molecular mechanisms through which myostatin regulates body fat content and insulin sensitivity are not known. Therefore, the aim of the current study was to identify signalling pathways through which myostatin regulates insulin sensitivity. Methods Wild-type (WT) mice and Mstn−/− mice were fed either a control chow diet or a high fat diet (HFD) for 12 weeks. Glucose tolerance testing and insulin stimulated glucose uptake by M. extensor digitorum longus (EDL) were used as variables to determine insulin sensitivity. Quantitative PCR, Western blotting and enzyme assays were used to monitor AMP-activated protein kinase (AMPK) levels and activity. Results Mstn−/− mice exhibited reduced fat accumulation and peripheral insulin resistance when compared with WT mice, even when they were fed an HFD. Furthermore, treatment with a myostatin antagonist also increased insulin sensitivity during HFD. Consistent with increased insulin sensitivity, we also detected elevated levels of GLUT4, AKT, p-AKT and insulin receptor substrate-1 in Mstn−/− muscles. Molecular analysis showed that there is increased expression and activity of AMPK in Mstn−/− muscles. Furthermore, we also observed an increase in the AMPK downstream target genes, Sirt1 and Pgc-1α (also known as Ppargc1a), in skeletal muscle of Mstn−/− mice. Conclusions/interpretation We conclude that myostatin inactivation leads to increased AMPK levels and activity resulting in increased insulin sensitivity of skeletal muscle. We propose that, by regulating AMPK in skeletal muscle and adipose tissues, myostatin plays a major role in regulating insulin signalling.