Liver X receptors (LXR) alpha and beta are nuclear oxysterol receptors with established roles in cholesterol, lipid, and carbohydrate metabolism. Although LXRs have been extensively studied in liver and macrophages, the importance for development and metabolism of other tissues and cell types is not as well characterized. We demonstrate here that although LXRalpha and LXRbeta are not required for adipocyte development per se, LXRbeta is required for the increase in adipocyte size that normally occurs with aging and diet-induced obesity. Similar food intake and oxygen consumption in LXRbeta-/- mice suggests that reduced storage of lipid in adipose tissue is not due to altered energy balance. Despite reduced amounts of adipose tissue, LXRbeta-/- mice on a chow diet have insulin sensitivity and levels of adipocyte hormones similar to wild type mice. However, these mice are glucose-intolerant due to impaired glucose-induced insulin secretion. Lipid droplets in pancreatic islets may result from accumulation of cholesterol esters as analysis of islet gene expression reveals that LXRbeta is required for expression of the cholesterol transporters, ABCA1 and ABCG1. Our data establish novel roles for LXRbeta in adipocyte growth, glucose homeostasis, and beta cell function.