Insulin stimulates glucose uptake in 3T3-L1 adipocytes in part by causing endoproteolytic cleavage of TUG proteins. Cleavage liberates intracellularly sequestered GLUT4 glucose transporters for translocation to the cell surface. To test the role of this regulation in muscle, we used mice with muscle-specific transgenic expression of a truncated TUG fragment, UBX-Cter. This fragment causes GLUT4 translocation in unstimulated 3T3-L1 adipocytes. We predicted that transgenic mice would have GLUT4 translocation in muscle during fasting. UBX-Cter expression caused depletion of PIST proteins, which transmit an insulin signal to TUG. Whereas insulin stimulated TUG proteolysis in control muscles, proteolysis was constitutive in transgenic muscles. Fasting transgenic mice had decreased plasma glucose and insulin concentrations, compared to controls. Whole-body glucose turnover was increased during fasting, but not during hyperinsulinemic clamp studies. In muscles with greatest UBX-Cter expression, 2-deoxyglucose uptake during fasting was similar to that in control muscles during hyperinsulinemic clamps. Fasting transgenic mice had increased muscle glycogen, and GLUT4 targeting to T-tubule fractions was increased 5.7-fold. Whole-body VO2, VCO2, and energy expenditure were increased by 12-13%. After 3 weeks on a high-fat diet, the decreased fasting plasma glucose in transgenic mice, compared to controls, was more marked, and increased glucose turnover was not observed; the transgenic mice continued to have an increased metabolic rate. We conclude that insulin stimulates TUG proteolysis to translocate GLUT4 in muscle, that this pathway impacts systemic glucose homeostasis and energy metabolism, and that effects of activating this pathway are maintained during high fat diet-induced insulin resistance in mice.