Diabetes risk increases significantly with age and correlates with lower oxidative capacity in muscle. Decreased expression of peroxisome proliferator-activated receptor-γ coactivator-1α ( Pgc-1α) and target gene pathways involved in mitochondrial oxidative phosphorylation are associated with muscle insulin resistance, but a causative role has not been established. We sought to determine whether a decline in Pgc-1α and oxidative gene expression occurs during aging and potentiates the development of age-associated insulin resistance. Muscle-specific Pgc-1α knockout (MKO) mice and wild-type littermate controls were aged for 2 yr. Genetic signatures of skeletal muscle (microarray and mRNA expression) and metabolic profiles (glucose homeostasis, mitochondrial metabolism, body composition, lipids, and indirect calorimetry) of mice were compared at 3, 12, and 24 mo of age. Microarray and gene set enrichment analysis highlighted decreased function of the electron transport chain as characteristic of both aging muscle and loss of Pgc-1α expression. Despite significant reductions in oxidative gene expression and succinate dehydrogenase activity, young mice lacking Pgc-1α in muscle had lower fasting glucose and insulin. Consistent with loss of oxidative capacity during aging, Pgc-1α and Pgc-1β expression were reduced in aged wild-type mouse muscle. Interestingly, the combination of age and loss of muscle Pgc-1α expression impaired glucose tolerance and led to increased fat mass, insulin resistance, and inflammatory markers in white adipose and liver tissues. Therefore, loss of Pgc-1α expression and decreased mitochondrial oxidative capacity contribute to worsening glucose tolerance and chronic systemic inflammation associated with aging.