Induction of heat shock protein 72 (HSP72) protects against obesity-induced insulin resistance, but the underlying mechanisms are unknown. Here we show that HSP72 plays a pivotal role in increasing skeletal muscle mitochondrial number and oxidative metabolism. Mice overexpressing HSP72 in skeletal muscle (HSP72Tg) and control wildtype (WT) mice were fed either a chow or high fat diet (HFD). Despite a similar energy intake when comparing HSP72Tg with WT mice, the HFD increased body weight, intramuscular lipid accumulation (triacylglecerol (TAG), diacylglecerol (DAG) but not ceramide) and insulin resistance in WT mice alone. Whole body oxygen consumption, fatty acid oxidation and endurance running capacity were markedly increased in HSP72Tg mice. Moreover, HSP72Tg mice exhibited an increase in mitochondrial number. In addition, the HSP72 co-inducer BGP-15, currently in human clinical trials for type 2 diabetes, also increased mitochondrial number and insulin sensitivity in a rat model of type 2 diabetes. Together, these data identify a novel role for activation of HSP72 in skeletal muscle. Thus, the increased oxidative metabolism associated with activation of HSP72 has potential clinical implications, not only for type 2 diabetes, but for other disorders where mitochondrial function is compromised.