Thioredoxin-interacting protein (Txnip) has been recently described as a possible link between cellular redox state and metabolism; Txnip binds thioredoxin and inhibits its disulfide reductase activity in vitro, while a naturally occurring strain of Txnip-deficient mice has hyperlipidemia, hypoglycemia, and ketosis exacerbated by fasting. We generated Txnip-null mice to investigate the role of Txnip in glucose homeostasis. Txnip-null mice were hypoglycemic, hypoinsulinemic, and had blunted glucose production following a glucagon challenge, consistent with a central liver glucose-handling defect. Glucose release from isolated Txnip-null hepatocytes was 2-fold lower than wild-type hepatocytes, whereas beta-hydroxybutyrate release was increased 2-fold, supporting an intrinsic defect in hepatocyte glucose metabolism. While hepatocyte-specific gene deletion of Txnip did not alter glucose clearance compared with littermate controls, Txnip expression in the liver was required for maintaining normal fasting glycemia and glucose production. In addition, hepatic overexpression of a Txnip transgene in wild-type mice resulted in elevated serum glucose levels and decreased ketone levels. Liver homogenates from Txnip-null mice had no significant differences in the glutathione oxidation state or in the amount of available thioredoxin. However, overexpression of wild-type Txnip in Txnip-null hepatocytes rescued cellular glucose production, whereas overexpression of a C247S mutant Txnip, which does not bind thioredoxin, had no effect. These data demonstrate that Txnip is required for normal glucose homeostasis in the liver. While available thioredoxin is not changed in Txnip-null mice, the effects of Txnip on glucose homeostasis are abolished by a single cysteine mutation that inhibits binding to thioredoxin.