The TAZ activator 2-butyl-5-methyl-6-(pyridine-3-yl)-3-[2'-(1H-tetrazole-5-yl)-biphenyl-4-ylmethyl]-3H-imidazo[4,5-b]pyridine] (TM-25659) inhibits adipocyte differentiation by interacting with peroxisome proliferator-activated receptor gamma. TM-25659 was previously shown to decrease weight gain in a high fat (HF) diet-induced obesity (DIO) mouse model. However, the fundamental mechanisms underlying the effects of TM-25659 remain unknown. Therefore, we investigated the effects of TM-25659 on skeletal muscle functions in C2 myotubes and C57BL/6J mice. We studied the molecular mechanisms underlying the contribution of TM-25659 to palmitate (PA)-induced insulin resistance in C2 myotubes. TM-25659 improved PA-induced insulin resistance and inflammation in C2 myotubes. In addition, TM-25659 increased FGF21 mRNA expression, protein levels, and FGF21 secretion in C2 myotubes via activation of GCN2 pathways (GCN2-phosphoeIF2α-ATF4 and FGF21). This beneficial effect of TM-25659 was diminished by FGF21 siRNA. C57BL/6J mice were fed a HF diet for 30 weeks. The HF-diet group was randomly divided into two groups for the next 14 days: the HF-diet and HF-diet + TM-25659 groups. The HF diet + TM-25659-treated mice showed improvements in their fasting blood glucose levels, insulin sensitivity, insulin-stimulated Akt phosphorylation, and inflammation, but neither body weight nor food intake was affected. The HF diet + TM-25659-treated mice also exhibited increased expression of both FGF21 mRNA and protein. These data indicate that TM-25659 may be beneficial for treating insulin resistance by inducing FGF21 in models of PA-induced insulin resistance and HF diet-induced insulin resistance.