Caloric restriction (CR) improves insulin sensitivity and reduces the incidence of diabetes in obese individuals. The underlying mechanisms whereby CR improves insulin sensitivity are not clear. We evaluated the effect of 16 weeks of CR on whole-body insulin sensitivity by pancreatic clamp before and after CR in 11 obese participants (BMI = 35 kg/m²) compared with 9 matched control subjects (BMI = 34 kg/m²). Compared with the control subjects, CR increased the glucose infusion rate needed to maintain euglycemia during hyperinsulinemia, indicating enhancement of peripheral insulin sensitivity. This improvement in insulin sensitivity was not accompanied by changes in skeletal muscle mitochondrial oxidative capacity or oxidant emissions, nor were there changes in skeletal muscle ceramide, diacylglycerol, or amino acid metabolite levels. However, CR lowered insulin-stimulated thioredoxin-interacting protein (TXNIP) levels and enhanced nonoxidative glucose disposal. These results support a role for TXNIP in mediating the improvement in peripheral insulin sensitivity after CR.