Variation in TCF7L2 confers susceptibility to type 2 diabetes, but the mechanisms underlying this association are poorly understood. Hans Clevers and colleagues now report a key role for Tcf7l2 in regulating the metabolic activity of hepatocytes (Cell 151, 1595–1607, 2012). The authors generated mice with a conditional knockout of Tcf7l2 in pancreatic beta cells and found that the mice exhibited normal glucose handling in response to various dietary states. In contrast, mice with constitutive knockout of Tcf7l2 died shortly after birth with severe hypoglycemia. Analyses of liver function in these mice identified pronounced defects in carbohydrate and lipid metabolism, accompanied by reduced expression of key metabolic enzymes. To further assess the role of Tcf7l2 in liver, the authors conditionally deleted Tcf7l2 in adult hepatocytes and found that this resulted in reduced glucose levels in response to fasting or a high-fat diet, due to defective hepatic gluconeogenesis. Conversely, they found that transient overexpression of Tcf7l2 in adult liver resulted in elevated glucose levels accompanied by induction of a subset of metabolic target genes. These findings identify the liver as a key site of TCF7L2 function that may underlie its role in disease risk.