Testosterone negatively regulates fat mass in males, however the mechanism by which testosterone exerts these effects are poorly understood. We and others have shown that deletion of the target for testosterone action, the androgen receptor (AR), in mice results in a phenotype that mimics the three key clinical aspects of hypogonadism in human males, that is increased fat mass, and decreased bone and muscle mass. We now show that replacement of the AR gene specifically in progenitor cells (PCs) residing in the bone marrow of Global-ARKO mice (PC-AR Gene Replacements), completely attenuates their increased fat mass, resetting subcutaneous and peri-renal visceral fat depots to below the normal levels seen in wild type (WT) littermates by 12 wks of age (P<0.001 vs WT & Global-ARKO, n=11-18/grp). The marked decrease in subcutaneous and visceral fat mass in PC-AR Gene Replacements is associated with a shift in the distribution of adipocyte cross-sectional area with more, smaller adipocytes than WT and Global-ARKOs (P<0.05 vs WT & Global-ARKO, n=4/grp, 4 fields counted/section), suggestive of a healthier metabolic profile. Euglycaemic/hyperinsulinaemic clamp studies in the PC-AR Gene replacement mice demonstrate higher glucose infusion rates compared to WT mice (P<0.01 vs WT, n=3-5/grp) indicating an increase in whole-body insulin sensitivity with increased glucose disposal into various tissues in the PC-AR Gene Replacements. We have previously shown that replacement of the AR in bone marrow PCs of Global-ARKOs restores trabecular and cortical bone to WT levels, while skeletal muscle mass is unaffected. This increase in bone in PC-AR Gene Replacements is associated with increased Runx2 expression, a key osteoblast differentiation factor, compared to Global-ARKOs (P<0.05, n=10/grp). Taken together, our data support an action for testosterone via the AR in bone marrow PCs to divert their differentiation away from the adipocyte lineage towards the bone lineage, thereby reducing fat accumulation.