Macrophage metalloelastase, a matrix metallopeptidase (MMP12) predominantly expressed by mature tissue macrophages, is implicated in pathological processes. However, physiological functions for MMP12 have not been described. Because mRNA levels for the enzyme increase markedly in adipose tissue of obese mice, we investigated the role of MMP12 in adipose tissue expansion and insulin resistance. In humans, MMP12 expression correlated positively and significantly with insulin resistance, TNF-α expression, and the number of CD14⁺CD206⁺ macrophages in adipose tissue. MMP12 was the most abundant matrix metallopeptidase detected by proteomic analysis of conditioned medium of M2 macrophages and dendritic cells. In contrast, it was detected only at low levels in bone marrow derived macrophages and M1 macrophages. When mice received a high-fat diet, adipose tissue mass increased and CD11b⁺F4/80⁺CD11c⁻macrophages accumulated to a greater extent in MMP12-deficient (Mmp12^−/−) mice than in wild-type mice (Mmp12^+/+). Despite being markedly more obese, fat-fed Mmp12^−/− mice were more insulin sensitive than fat-fed Mmp12^+/+ mice. Expression of inducible nitric oxide synthase (Nos2) by Mmp12^−/− macrophages was significantly impaired both in vivo and in vitro, suggesting that MMP12 might mediate nitric oxide production during inflammation. We propose that MMP12 acts as a double-edged sword by promoting insulin resistance while combatting adipose tissue expansion.