Obesity associated hepatic steatosis is manifested by selective insulin resistance where lipogenesis remains sensitive to insulin, whereas, the ability of insulin to suppress glucose production is impaired. P70 S6 kinase (S6K), the downstream substrate of mammalian target of rapamycin, has been highlighted as a molecular link between obesity and insulin resistance. To elucidate the physiological role of S6K in selective insulin resistance, we have created a mice model of liver specific knockdown of S6K by systemic delivery of adeno-associated virus carrying short hairpin small interference RNA for S6K and examined the effects of S6K deficiency on hepatic steatosis and systemic insulin resistance in C57BL/6 mice. S6K knockdown in liver (L-S6K-KD) resulted in rapid lowering of blood glucose and fasting plasma insulin concentrations, without changes in food intake or body weight. This improvement was accompanied by enhanced glycogen content in liver. L-S6K-KD mice fed high fat diet showed improved glucose tolerance and insulin sensitivity compared to control. This insulin sensitization took place in liver, skeletal muscle, and adipose tissue as assessed by the hyperinsulinemic-euglycemic clamp technique. Additionally, L-S6K-KD mice showed amelioration of steatosis as demonstrated by triglyceride measurements and Oil Red O staining. This was associated with down-regulation of key lipogenic genes upon refeeding after a 21 hr fasting with a robust increase in insulin signal transduction in liver. Importantly, S6K deficiency mediated a significant increase in epididymal fat mass, under refeeding conditions, which is the opposite to the decrease in liver weight. In conclusion, our results demonstrate the importance of S6K for the development of hepatic steatosis and systemic insulin resistance in obese mice.