Obesity is associated with chronic low-level inflammation, especially in fat tissues, which contributes to insulin resistance and type 2 diabetes mellitus (T2DM). Protein inhibitor of activated STAT 1 (PIAS1) modulates a variety of cellular processes such as cell proliferation and DNA damage responses. Particularly, PIAS1 functions in the innate immune system and is a key regulator of the inflammation cascade. However, whether PIAS1 is involved in the regulation of insulin sensitivity remains unknown. Here, we demonstrated that PIAS1 expression in white adipose tissue (WAT) was downregulated by c-Jun N-terminal kinase in prediabetic mice models. Overexpression of PIAS1 in inguinal WAT of prediabetic mice significantly improved systemic insulin sensitivity, whereas knockdown of PIAS1 in wild-type mice led to insulin resistance. Mechanistically, PIAS1 inhibited the activation of stress-induced kinases and the expression of nuclear factor-κB target genes in adipocytes, mainly including proinflammatory and chemotactic factors. In doing so, PIAS1 inhibited macrophage infiltration in adipose tissue, thus suppressing amplification of the inflammation cascade, which in turn improved insulin sensitivity. These results were further verified in a fat transplantation model. Our findings shed light on the critical role of PIAS1 in controlling insulin sensitivity and suggest a therapeutic potential of PIAS1 in T2DM.