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Mounting evidence suggests that the endocannabinoid system regulates energy metabolism through direct effects on peripheral tissues as well as central effects that regulate appetite. Here we examined the effect of cannabinoid receptor 1 (CB1) signaling on insulin action in fat cells. We examined effects of the natural CB1 agonist, 2-Arachidonoylglycerol (2-AG), and the synthetic CB1 antagonist, SR141716, on insulin action in cultured adipocytes. We used translocation of glucose transporter GLUT4 to plasma membrane (PM) as a measure of insulin action. 2-AG activation of the CB1 receptor promoted insulin sensitivity whereas antagonism by SR141716 reduced insulin sensitivity. Neither drug affected GLUT4 translocation in the absence of insulin or with high doses of insulin. Consistent with these results we found that insulin-stimulated phosphorylation of the protein kinase Akt was increased by 2-AG, attenuated by SR141716, and unaffected in the absence of insulin or by addition of high-dose insulin. These data provide a functional and molecular link between the CB1 receptor and insulin sensitivity, because insulin-stimulated phosphorylation of Akt is required for GLUT4 translocation to the PM. The sensitizing effects of 2-AG were abrogated by SR141716 and Pertussis toxin, indicating that the effects are mediated by CB1 receptor. Importantly, neither 2-AG nor SR141716 alone or in combination with maximal dose of insulin had effects on GLUT4 translocation and Akt phosphorylation. These data are consistent with a model in which the endocannabinoid system sets the sensitivity of the insulin response in adipocytes rather than directly regulating the redistribution of GLUT4 or Akt phosphorylation.