We examined mechanisms by which L-4F reduces obesity and diabetes in obese (ob) diabetic mice. We hypothesized that L-4F reduces adiposity via increased pAMPK, pAKT, HO-1, and increased insulin receptor phosphorylation in ob mice. Obese and lean mice were divided into five groups: lean, lean-L-4F-treated, ob, ob-L-4F-treated, and ob-L-4F-LY294002. Food intake, insulin, glucose adipocyte stem cells, pAMPK, pAKT, CB1, and insulin receptor phosphorylation were determined. Subcutaneous (SAT) and visceral adipose tissue (VAT) were determined by MRI and hepatic lipid content by magnetic resonance spectroscopy. SAT and VAT volumes decreased in ob-L-4F-treated animals compared with control. L-4F treatment decreased hepatic lipid content and increased the numbers of small adipocytes (P < 0.05) and phosphorylation of insulin receptors. L-4F decreased CB1 in SAT and VAT and increased pAKT and pAMPK in endothelium. L-4F-mediated improvement in endothelium was prevented by LY294002. Inhibition of pAKT and pAMPK by LY294002 was associated with an increase in glucose levels. Upregulation of HO-1 by L-4F produced adipose remodeling and increased the number of small differentiated adipocytes. The anti-obesity effects of L-4F are manifested by a decrease in visceral fat content with reciprocal increases in adiponectin, pAMPK, pAKT, and phosphorylation of insulin receptors with improved insulin sensitivity.