Liver-specific insulin receptor knock-out (LIRKO) mice display hyperinsulinemia, abnormal glucose metabolism, and progressive liver dysfunction. In addition, circulating leptin levels appear to be increased more than 10-fold. However, food intake, body weight, and adipose mass are not significantly altered in LIRKO mice compared with wild-type littermates. Using a ligand immunofunctional assay, we found that the apparent increase in circulating leptin in LIRKO mice is because of an 80-fold increased serum level of soluble leptin receptor. Gene expression analysis by microarray and real time PCR reveals the liver as the source of soluble leptin receptor in LIRKO mice, with an increase in expression of the short (Ob-Ra), long (Ob-Rb), and soluble (Ob-Re) forms of the leptin receptor. Direct control of leptin receptor expression by insulin could also be demonstrated in isolated hepatocytes from normal mice. Despite the markedly increased levels of leptin receptor in their circulation, LIRKO mice exhibit normal or even enhanced leptin sensitivity, as assessed by their physiological and molecular responses to exogenous leptin administration and their lower base-line hypothalamic levels of SOCS3 mRNA. Thus, insulin signaling in the liver plays an important role in control of leptin receptor expression and shedding. In the LIRKO mouse, this is lost, leading to markedly increased leptin receptors into the circulation. These high levels of circulating leptin receptor bind leptin and likely alter its clearance, but do not inhibit leptin action and may actually potentiate leptin action. In this manner, insulin signaling in liver plays an important role in leptin homeostasis and fine modulation of leptin action.