AC-261066 is an agonist of retinoic acid receptor subtype β isoform 2 (RARβ2). Administration of AC-261066 to either wt mice in a model of HFD-induced T2D or to ob/ob and db/db mice reduces hyperglycaemia, peripheral insulin resistance and body weight. Furthermore, AC-261066 dramatically reduces steatosis, lipid peroxidation and oxidative stress in the liver, pancreas and kidneys of obese, diabetic mice. AC-261066 also lowers levels of mRNAs involved in lipogenesis, such as sterol regulatory element-binding transcription factor 1 (SREBP1) and fatty acid synthase, and increases mRNAs that mediate mitochondrial fatty acid β-oxidation, such as CPT1α, in these organs. AC-261066 lowers triglyceride levels in these organs, and in muscle. AC-261066 should be useful drug for T2D therapy and for treatment of hepatic steatosis.