PGC-1beta is a transcriptional coactivator that potently stimulates mitochondrial biogenesis and respiration of cells. Here, we have generated mice lacking exons 3 to 4 of the Pgc-1beta gene (Pgc-1beta(E3,4-/E3,4-) mice). These mice express a mutant protein that has reduced coactivation activity on a subset of transcription factors, including ERRalpha, a major target of PGC-1beta in the induction of mitochondrial gene expression. The mutant mice have reduced expression of OXPHOS genes and mitochondrial dysfunction in liver and skeletal muscle as well as elevated liver triglycerides. Euglycemic-hyperinsulinemic clamp and insulin signaling studies show that PGC-1beta mutant mice have normal skeletal muscle response to insulin but have hepatic insulin resistance. These results demonstrate that PGC-1beta is required for normal expression of OXPHOS genes and mitochondrial function in liver and skeletal muscle. Importantly, these abnormalities do not cause insulin resistance in skeletal muscle but cause substantially reduced insulin action in the liver.