Uncoupling protein-3 (UCP-3) is a recently identified member of the mitochondrial transporter superfamily that is expressed predominantly in skeletal muscle. However, its close relative UCP-1 is expressed exclusively in brown adipose tissue, a tissue whose main function is fat combustion and thermogenesis. Studies on the expression of UCP-3 in animals and humans in different physiological situations support a role for UCP-3 in energy balance and lipid metabolism. However, direct evidence for these roles is lacking. Here we describe the creation of transgenic mice that overexpress human UCP-3 in skeletal muscle. These mice are hyperphagic but weigh less than their wild-type littermates. Magnetic resonance imaging shows a striking reduction in adipose tissue mass. The mice also exhibit lower fasting plasma glucose and insulin levels and an increased glucose clearance rate. This provides evidence that skeletal muscle UCP-3 has the potential to influence metabolic rate and glucose homeostasis in the whole animal.