Metabolic disorders are a major burden for public health systems globally. Regular exercise improves metabolic health. Pharmacological targeting of exercise mediators might facilitate physical activity or amplify the effects of exercise. The peroxisome proliferator-activated receptor γ coactivator 1α (PGC-1α) largely mediates musculoskeletal adaptations to exercise, including lipid refueling, and thus constitutes such a putative target. Paradoxically, forced expression of PGC-1α in muscle promotes diet-induced insulin resistance in sedentary animals. We show that elevated PGC-1α in combination with exercise preferentially improves glucose homeostasis, increases Krebs cycle activity, and reduces the levels of acylcarnitines and sphingosine. Moreover, patterns of lipid partitioning are altered in favor of enhanced insulin sensitivity in response to combined PGC-1α and exercise. Our findings reveal how physical activity improves glucose homeostasis. Furthermore, our data suggest that the combination of elevated muscle PGC-1α and exercise constitutes a promising approach for the treatment of metabolic disorders.