Phosphoinositides (PIs) are a class of membrane-bound phospholipids that are phosphorylated at one or more of three positions on the inositol ring to generate seven PI species, which bind specific effector proteins to regulate diverse cellular functions. Distinct PIs are transiently and reversibly interconverted on cellular membranes by the opposing actions of PI-kinases, versus PI phosphatases. 5-phosphatases hydrolyse PI(3,4,5)P3 and PI(4,5)P2 to form PI(3,4)P2 and PI(4)P, thus regulating PI effectors’ recruitment to cell membranes and thereby signalling activation. Ten mammalian inositol polyphosphate 5-phosphatase family members have been identified, and characterisation of murine knock-outs for each of 5-phosphatase has revealed minimal functional redundancy, while mutations in 5-phosphatases are associated with developmental syndromes. The 5-phosphatases, including SHIP2 and INPP5K have been shown to regulate insulin actions via suppression of PI3K-AKT signalling in specific tissues and cells, however, the molecular mechanisms by which distinct phosphoinositide 5-phosphatases participate in metabolic regulation has not been extensively characterised. Here we report that conditional deletion of a 5-phosphatase in murine skeletal muscles exhibited resistance to weight gain due to inability to gain body fat, both on a normal and high fat diet. Glucose tolerance and insulin sensitivity improved in skeletal muscle-specific 5-phosphatase knockout mice. Indirect calorimetry measurements demonstrated that skeletal muscle-specific loss of this 5-phosphatase led to decreased energy expenditure despite unaltered energy intake, indicating novel molecular mechanisms may account for these metabolic phenotypes. 5-phosphatase ablation in skeletal muscle was associated with accumulation of mitochondria in muscle, however, mitochondrial ATP generation was reduced, suggestive of decreased mitochondrial oxidative phosphorylation capacity. Previous research has demonstrated that mitochondrial oxidative phosphorylation inefficiency may counteract obesity and insulin resistance. Therefore, our research reveals a potential molecular mechanism whereby muscle mitochondrial oxidative phosphorylation inefficiency resulting from skeletal muscle specific 5-phosphatase deficiency protects mice from obesity and insulin resistance.