The neuropeptide Y (NPY) system is one of the most powerful regulators of energy homeostasis, controlling important metabolic processes both centrally as well as in the periphery. While there is a large body of work that describes the central function, little is known about the action of NPY in peripheral tissues. Here we report that employing a non-brain penetrable selective Y1R antagonist (BIBO3304) is sufficient to reduce fat mass in diet induced obese (DIO) mice without any negative effects on lean mass. Furthermore, DIO mice treated with BIBO3304 show improved glucose tolerance, which is associated with increased serum insulin concentrations. As a consequence of BIBO3304 treatment average adipocyte size is smaller in the DIO mice compared to controls and interestingly this is accompanied with markedly upregulated adiponectin expression in adipose tissue. Mechanistically this might be due to the reduced inhibition of insulin release from the pancreas and/or improved insulin action in target tissue where reduced Y1 signalling can act synergistic in glucose uptake. Together, our data suggests that targeting peripheral Y1 receptor might provide a more effective treatment option to ameliorate diet-induced obesity without the common adverse effects of central acting agents.