Impairment of insulin signaling in skeletal muscle detrimentally affects insulin-stimulated disposal of glucose. Restoration of insulin signaling in skeletal muscle is important as muscle is one of the major sites for disposal of blood glucose. Recently, unacylated ghrelin (UnAG) has received attention in diabetic research due to its favorable actions on improving glucose tolerance, glycemic control, and insulin sensitivity. The investigation of UnAG has entered phase Ib clinical trial in type 2 diabetes and phase II clinical trial in hyperphagia in Prader-Willi syndrome. Nonetheless, the precise mechanisms responsible for the anti-diabetic actions of UnAG remain incompletely understood. In this study, we examined the effects of UnAG on restoring the impaired insulin signaling in skeletal muscle of db/db diabetic mice. Our results demonstrated that UnAG effectively restored the impaired insulin signaling in diabetic muscle. UnAG decreased insulin receptor substrate (IRS) phosphorylation, increased protein kinase B (Akt) phosphorylation, and, hence, suppressed mTOR signaling. Consequently, UnAG enhanced Glut4 localization and increased PDH activity in the diabetic skeletal muscle. Intriguingly, our data indicated that UnAG normalized the suppressed autophagic signaling in diabetic muscle. In conclusion, our findings illustrated that UnAG restored the impaired insulin and autophagic signaling in skeletal muscle of diabetic mice, which are valuable to understand the underlying mechanisms of the anti-diabetic action of UnAG at peripheral skeletal muscle level.