The transcription factor CCAAT/enhancer-binding protein β (C/EBPβ) is enriched in liver and adipose tissue and controls the expression of a wide variety of genes coding for important metabolic pathways, including gluconeogenesis and lipid synthesis. To investigate the role of C/EBPβ on glucose homeostasis, we studied mice with a targeted deletion of the gene for C/EBPβ^–/– mice. Adult C/EBPβ^–/– mice have hypoglycemia after an 18-hour fast, accompanied by lower hepatic glucose production (40% of that of wild-type mice), with no change in plasma insulin and a lower concentration of plasma free fatty acids (FFA). Glucagon infusion during a pancreatic clamp acutely stimulated hepatic glucose production by 38% in wild-type animals, with no change detected in C/EBPβ^–/– mice. Unexpectedly, both the basal and glucagon-stimulated hepatic cyclic adenosine monophosphate (cAMP) levels were lower in C/EBPβ^–/– mice, indicating an essential role for C/EBPβ in controlling proximal signal transduction. Fasting hypoglycemia was associated with normal levels of phosphoenolpyruvate carboxykinase (PEPCK) and glucose-6-phosphatase (G6Pase) gene expression, however net liver glycogenolysis was impaired in C/EBPβ^–/– mice. FFA release from isolated adipose tissue in response to epinephrine was 68% lower in C/EBPβ^–/– mice than in control animals; however, N⁶,O^2′-dibutyryladenosine (Bt₂) cAMP stimulated a twofold increase in FFA release in C/EBPβ^–/– compared with no further increase in wild-type mice. Because a deletion in the gene for C/EBPβ reduces blood glucose and circulating FFA, it could be an important therapeutic target for the treatment of non–insulin-dependent diabetes and possibly obesity, based on designing antagonists that decrease C/EBPβ activity.