Bile acid sequestrants are nonabsorbable resins designed to treat hypercholesterolemia by preventing ileal uptake of bile acids, thus increasing catabolism of cholesterol into bile acids. However, sequestrants also improve hyperglycemia and hyperinsulinemia through less characterized metabolic and molecular mechanisms. Here, we demonstrate that the bile acid sequestrant, colesevelam, significantly reduced hepatic glucose production by suppressing hepatic glycogenolysis in diet-induced obese mice and that this was partially mediated by activation of the G protein-coupled bile acid receptor TGR5 and glucagon-like peptide-1 (GLP-1) release. A GLP-1 receptor antagonist blocked suppression of hepatic glycogenolysis and blunted but did not eliminate the effect of colesevelam on glycemia. The ability of colesevelam to induce GLP-1, lower glycemia, and spare hepatic glycogen content was compromised in mice lacking TGR5. In vitro assays revealed that bile acid activation of TGR5 initiates a prolonged cAMP signaling cascade and that this signaling was maintained even when the bile acid was complexed to colesevelam. Intestinal TGR5 was most abundantly expressed in the colon, and rectal administration of a colesevelam/bile acid complex was sufficient to induce portal GLP-1 concentration but did not activate the nuclear bile acid receptor farnesoid X receptor (FXR). The beneficial effects of colesevelam on cholesterol metabolism were mediated by FXR and were independent of TGR5/GLP-1. We conclude that colesevelam administration functions through a dual mechanism, which includes TGR5/GLP-1-dependent suppression of hepatic glycogenolysis and FXR-dependent cholesterol reduction.