Insulin stimulates glucose uptake by promoting the trafficking of GLUT4 to the plasma membrane in muscle cells, and impairment of this insulin action contributes to hyperglycemia in type 2 diabetes. The adaptor protein APPL1 potentiates insulin-stimulated Akt activation and downstream actions. However, the physiological functions of APPL2, a close homolog of APPL1, in regulating glucose metabolism remain elusive. We show that insulin-evoked plasma membrane recruitment of GLUT4 and glucose uptake are impaired by APPL2 overexpression but enhanced by APPL2 knockdown. Likewise, conditional deletion of APPL2 in skeletal muscles enhances insulin sensitivity, leading to an improvement in glucose tolerance. We identified the Rab-GTPase–activating protein TBC1D1 as an interacting partner of APPL2. Insulin stimulates TBC1D1 phosphorylation on serine 235, leading to enhanced interaction with the BAR domain of APPL2, which in turn suppresses insulin-evoked TBC1D1 phosphorylation on threonine 596 in cultured myotubes and skeletal muscle. Substitution of serine 235 with alanine diminishes APPL2-mediated inhibition on insulin-dependent TBC1D1 phosphorylation on threonine 596 and the suppressive effects of TBC1D1 on insulin-induced glucose uptake and GLUT4 translocation to the plasma membrane in cultured myotubes. Therefore, the APPL2–TBC1D1 interaction is a key step to fine tune insulin-stimulated glucose uptake by regulating the membrane recruitment of GLUT4 in skeletal muscle.