Skeletal muscle microvascular dysfunction contributes to disease severity in type 2 diabetes. Recent studies indicate a role for Forkhead box O (FoxO) transcription factors in modulating endothelial cell phenotype. We hypothesized that a high‐fat (HF) diet generates a dysfunctional vascular niche through an increased expression of endothelial FoxO. FoxO1 protein increased (+130%) in the skeletal muscle capillaries from HF compared to normal chow‐fed mice. FoxO1 protein was significantly elevated in cultured endothelial cells exposed to the saturated fatty acid palmitate or the proinflammatory cytokine TNF‐α. In HF‐fed mice, endothelium‐directed depletion of FoxO1/3/ 4(FoxOD) improved insulin sensitivity (+110%) compared to that of the controls (FoxOL/L). The number of skeletal muscle capillaries increased significantly in the HF‐FoxOD mice. Transcript profiling of skeletal muscle identified significant increases in genes associated with angiogenesis and lipid metabolism in HF‐FoxOD vs. HF‐FoxOL/L mice. HF‐FoxOD muscle also was characterized by a decrease in inflammation‐related genes and an enriched M2 macrophage signature. We conclude that endothelial FoxO proteins promote insulin resistance in HF diet, which may in part result from FoxO proteins establishing an antiangiogenic and proinflammatory microenvironment within skeletal muscle. These findings provide mechanistic insight into the development of microvascular dysfunction in the progression of type 2 diabetes.—Nwadozi, E., Roudier, E., Rullman, E., Tharmalingam, S., Liu, H.‐Y., Gustafsson, T., Haas, T. L. Endothelial FoxO proteins impair insulin sensitivity and restrain muscle angiogenesis in response to a high‐fat diet. FASEB J. 30, 3039–3052 (2016). http://www.fasebj.org