Adiponectin has received considerable attention for its potential anti-diabetic actions. The adipokine exerts control of glucose and lipid homeostasis via critical effects within the liver, adipose, and pancreas. By stimulating adipogenesis, opposing inflammation, and influencing rates of lipid oxidation and lipolysis, adiponectin critically governs lipid spillover into non-adipose tissues. Ceramide, a cytotoxic and insulin desensitizing lipid metabolite formed when peripheral tissues are exposed to excessive lipid deposition, is potently opposed by adiponectin. Via adiponectin receptors, AdipoR1 and AdipoR2, adiponectin stimulates the deacylation of ceramide- yielding sphingosine for conversion to sphingosine 1-phosphate (S1P) by sphingosine kinase. The resulting conversion from ceramide to S1P promotes survival of functional beta cell mass, allowing for insulin production to meet insulin demands. Alleviation of ceramide burden on the liver allows for improvements in hepatic insulin action. Here, we summarize how adiponectin-induced changes in these tissues lead to improvements in glucose metabolism, highlighting the sphingolipid signaling mechanisms linking adiponectin to each action.