Obese obob mice with strong overexpression of the human apolipoprotein C1 (APOC1) exhibit excessive free fatty acid (FFA) and triglyceride (TG) levels and severely reduced body weight (due to the absence of subcutaneous adipose tissue) and skin abnormalities. To evaluate the effects of APOC1 overexpression on hepatic and peripheral insulin sensitivity in a less-extreme model, we generated obob mice with mild overexpression of APOC1 (obob/APOC1(+/-)) and performed hyperinsulinemic clamp analysis. Compared with obob littermates, obob/APOC1(+/-) mice showed reduced body weight (-25%) and increased plasma levels of TG (+632%), total cholesterol (+134%), FFA (+65%), glucose (+73%), and insulin (+49%). Hyperinsulinemic clamp analysis revealed severe whole-body and hepatic insulin resistance in obob/APOC1(+/-) mice and, in addition, increased hepatic uptake of FFA and hepatic TG content. Treatment of obob/APOC1(+/-) mice with rosiglitazone strongly improved whole-body insulin sensitivity as well as hepatic insulin sensitivity, despite a further increase of hepatic fatty acid (FA) uptake and a panlobular increase of hepatic TG accumulation. We conclude that overexpression of APOC1 prevents rosiglitazone-induced peripheral FA uptake leading to severe hepatic steatosis. Interestingly, despite rosiglitazone-induced hepatic steatosis, hepatic insulin sensitivity improves dramatically. We hypothesize that the different hepatic fat accumulation and/or decrease in FA intermediates has a major effect on the insulin sensitivity of the liver.