Diabetes is a metabolic disorder with an increasing global prevalence. Somatostatin (SST), a peptide hormone, regulates hormone secretion via five SST receptor (SSTR) subtypes (SSTR1–5) in a tissue‐specific manner. As SSTR5 is expressed in pancreatic β‐cells and intestinal L‐cells, studies have suggested that SSTR5 regulates glucose tolerance through insulin and incretin secretion, thereby having a prominent role in diabetes. Moreover, SSTR5 knockout (KO) mice display enhanced insulin sensitivity; however, the underlying mechanism has not been clarified. Therefore, in this study, we investigate the effect of SSTR5 blockade on insulin resistance and the target organ using SSTR5 KO mice and a selective SSTR5 antagonist (compound‐1). High‐fat diet (HFD)‐fed SSTR5 KO mice exhibited significantly lower homeostasis model assessment of insulin resistance (HOMA‐IR) than HFD‐fed wild‐type mice. Two‐week oral administration of compound‐1 dose‐dependently and significantly reduced changes in the levels of glycosylated hemoglobin (GHb), plasma glucose, plasma insulin, and HOMA‐IR in male KK‐A
y
/Ta Jcl mice (KK‐A
y
mice), a model of obese type 2 diabetes with severe insulin resistance. Additionally, compound‐1 significantly increased the glucose infusion rate while decreasing hepatic glucose production in male KK‐A
y
mice, as evidenced by hyperinsulinemic‐euglycemic clamp analyses. In addition, compound‐1 ameliorated the insulin‐induced Akt phosphorylation suppression by octreotide in the liver of male C57BL/6J mice. Collectively, our results demonstrate that selective SSTR5 inhibition can improve insulin sensitivity by enhancing liver insulin action; thus, selective SSTR5 antagonists represent potentially novel therapeutic agents for type 2 diabetes.