Type 2 diabetics have an increased risk of developing atherosclerosis, suggesting the mechanisms that cause this disease are enhanced by insulin resistance. In this study we examined the effects of gene knock-out (KO) of lipocalin-type prostaglandin D(2) synthase (L-PGDS), a protein found at elevated levels in type 2 diabetics, on diet-induced glucose tolerance and atherosclerosis. Our results show that L-PGDS KO mice become glucose-in-tolerant and insulin-resistant at an accelerated rate when compared with the C57BL/6 control strain. Adipocytes were significantly larger in the L-PGDS KO mice compared with controls on the same diets. Cell culture data revealed significant differences between insulin-stimulated mitogen-activated protein kinase phosphatase-2, protein-tyrosine phosphatase-1D, and phosphorylated focal adhesion kinase expression levels in L-PGDS KO vascular smooth muscle cells and controls. In addition, only the L-PGDS KO mice developed nephropathy and an aortic thickening reminiscent to the early stages of atherosclerosis when fed a "diabetogenic" high fat diet. We conclude that L-PGDS plays an important role regulating insulin sensitivity and atherosclerosis in type 2 diabetes and may represent a novel model of insulin resistance, atherosclerosis, and diabetic nephropathy.