Mitochondria are known to be functional organelles, but their role as a signaling unit is increasingly being appreciated. The identification of a short open reading frame (sORF) in the mitochondrial DNA (mtDNA) that encodes a signaling peptide, humanin, suggests the possible existence of additional sORFs in the mtDNA. Here we report a sORF within the mitochondrial 12S rRNA encoding a 16-amino-acid peptide named MOTS-c (mitochondrial open reading frame of the 12S rRNA-c) that regulates insulin sensitivity and metabolic homeostasis. Its primary target organ appears to be the skeletal muscle, and its cellular actions inhibit the folate cycle and its tethered de novo purine biosynthesis, leading to AMPK activation. MOTS-c treatment in mice prevented age-dependent and high-fat-diet-induced insulin resistance, as well as diet-induced obesity. These results suggest that mitochondria may actively regulate metabolic homeostasis at the cellular and organismal level via peptides encoded within their genome.