Tissue macrophage inflammatory pathways contribute to obesity-associated insulin resistance. Here, we have examined the efficacy and mechanisms of action of a novel anti-inflammatory compound (HE3286) in vitro and in vivo. In primary murine macrophages, HE3286 attenuates LPS- and TNFalpha-stimulated inflammation. In Zucker diabetic fatty rats, inflammatory cytokine/chemokine expression was downregulated in liver and adipose tissue by HE3286 treatment, as was macrophage infiltration into adipose tissue. In line with reduced inflammation, HE3286 treatment normalized fasting and fed glucose levels, improved glucose tolerance, and enhanced skeletal muscle and liver insulin sensitivity, as assessed by hyperinsulinemic euglycemic clamp studies. In phase 2 clinical trials, HE3286 treatment led to an enhancement in insulin sensitivity in humans. Gluconeogenic capacity was also reduced by HE3286 treatment, as evidenced by a reduced glycemic response during pyruvate tolerance tests and decreased basal hepatic glucose production (HGP) rates. Since serum levels of gluconeogenic substrates were decreased by HE3286, it indicates that the reduction of both intrinsic gluconeogenic capacity and substrate availability contributes to the decrease in HGP. Lipidomic analysis revealed that HE3286 treatment reduced liver cholesterol and triglyceride content, leading to a feedback elevation of LDL receptor and HMG-CoA reductase expression. Accordingly, HE3286 treatment markedly decreased total serum cholesterol. In conclusion, HE3286 is a novel anti-inflammatory compound, which displays both glucose-lowering and cholesterol-lowering effects.