Obesity, especially visceral obesity, is associated with insulin resistance and metabolic syndrome. We previously identified the cell surface proteoglycan glypican-4 as differentially expressed in subcutaneous versus visceral white fat depots. Here we show that glypican-4 is released from cells and adipose tissue explants of mice, and that circulating glypican-4 levels correlate with BMI and insulin sensitivity in humans. Furthermore, glypican-4 interacts with the insulin receptor, enhances insulin receptor signaling, and enhances adipocyte differentiation. Conversely, depletion of glypican-4 results in reduced activation of the insulin receptor and prevents adipocyte differentiation in vitro by inhibiting insulin-mediated C/EBPβ phosphorylation. These functions of glypican-4 are independent of its glycosylphosphatidylinositol membrane anchorage, as a nonmembrane–bound mutant of glypican-4 phenocopies the effects of native glypican-4 overexpression. In summary, glypican-4 is a novel circulating insulin sensitizing adipose-derived factor that, unlike other insulin sensitizers, acts directly on the insulin receptor to enhance signaling.