The metabolic syndrome (visceral obesity, insulin resistance, type 2 diabetes, and dyslipidemia) resembles Cushing’s Syndrome, but without elevated circulating glucocorticoid levels. An emerging concept suggests that the aberrantly elevated levels of the intracellular glucocorticoid reamplifying enzyme 11β-hydroxysteroid dehydrogenase type 1 (11β-HSD-1) found in adipose tissue of obese humans and rodents underlies the phenotypic similarities between idiopathic and “Cushingoid” obesity. Transgenic overexpression of 11β-HSD-1 in adipose tissue reproduces a metabolic syndrome in mice, whereas 11β-HSD-1 deficiency or inhibition has beneficial metabolic effects, at least on liver metabolism. Here we report novel protective effects of 11β-HSD-1 deficiency on adipose function, distribution, and gene expression in vivo in 11β-HSD-1 nullizygous (11β-HSD-1^−/−) mice. 11β-HSD-1^−/− mice expressed lower resistin and tumor necrosis factor-α, but higher peroxisome proliferator–activated receptor-γ, adiponectin, and uncoupling protein-2 mRNA levels in adipose, indicating insulin sensitization. Isolated 11β-HSD-1^−/− adipocytes exhibited higher basal and insulin-stimulated glucose uptake. 11β-HSD-1^−/− mice also exhibited reduced visceral fat accumulation upon high-fat feeding. High-fat–fed 11β-HSD-1^−/− mice rederived onto the C57BL/6J strain resisted diabetes and weight gain despite consuming more calories. These data provide the first in vivo evidence that adipose 11β-HSD-1 deficiency beneficially alters adipose tissue distribution and function, complementing the reported effects of hepatic 11β-HSD-1 deficiency or inhibition.