p70 S6 kinase (S6K1) is a serine/threonine kinase that phosphorylates the insulin receptor substrate-1 (IRS-1) at serine 1101 and desensitizes insulin receptor signaling. S6K1 hyperactivation due to overnutrition leads to hyperglycemia and type 2 diabetes. Our recent study showed that A77 1726, the active metabolite of the anti-rheumatoid arthritis (RA) drug leflunomide, is an inhibitor of S6K1. Whether leflunomide can control hyperglycemia and sensitize the insulin receptor has not been tested. Here we report that A77 1726 increased AKTS473/T308 and S6K1T389 phosphorylation but decreased S6S235/236 and IRS-1S1101 phosphorylation in 3T3-L1 adipocytes, C2C12 and L6 myotubes. A77 1726 increased insulin receptor tyrosine phosphorylation and binding of the p85 subunit of the PI-3 kinase to IRS-1. A77 1726 enhanced insulin-stimulated glucose uptake in L6 myotubes and 3T3-L1 adipocytes, and enhanced insulin-stimulated glucose transporter type 4 (GLUT4) translocation to the plasma membrane of L6 cells. Finally, we investigated the anti-hyperglycemic effect of leflunomide on ob/ob and high-fat diet (HFD)-induced diabetes mouse models. Leflunomide treatment normalized blood glucose levels and overcame insulin resistance in glucose and insulin tolerance tests in ob/ob and HFD-fed mice but had no effect on mice fed a normal chow diet (NCD). Leflunomide treatment increased AKTS473/T308 phosphorylation in the fat and muscle of ob/ob mice but not in normal mice. Our results suggest that leflunomide sensitizes the insulin receptor by inhibiting S6K1 activity in vitro, and that leflunomide could be potentially useful for treating patients with both RA and diabetes.