Although the pharmacological effects of fibroblast growth factor 21 (FGF21) are well-documented, uncertainty about its role in regulating excessive energy intake remains. Here, we show that FGF21 improves systemic insulin sensitivity by promoting the healthy expansion of subcutaneous adipose tissue (SAT). Serum FGF21 levels positively correlate with the SAT area in insulin-sensitive obese individuals. FGF21 knockout mice (FGF21KO) show less SAT mass and are more insulin-resistant when fed a high-fat diet. Replenishment of recombinant FGF21 to a level equivalent to that in obesity restores SAT mass and reverses insulin resistance in FGF21KO, but not in adipose-specific βklotho knockout mice. Moreover, transplantation of SAT from wild-type to FGF21KO mice improves insulin sensitivity in the recipients. Mechanistically, circulating FGF21 upregulates adiponectin in SAT, accompanied by an increase of M2 macrophage polarization. We propose that elevated levels of endogenous FGF21 in obesity serve as a defense mechanism to protect against systemic insulin resistance.