Adipose tissue resident macrophages have important roles in the maintenance of tissue homeostasis and regulate insulin sensitivity for example by secreting pro-inflammatory or anti-inflammatory cytokines. Here, we show that M2-like macrophages in adipose tissue regulate systemic glucose homeostasis by inhibiting adipocyte progenitor proliferation via the CD206/TGF beta signaling pathway. We show that adipose tissue CD206(+) cells are primarily M2-like macrophages, and ablation of CD206(+) M2-like macrophages improves systemic insulin sensitivity, which was associated with an increased number of smaller adipocytes. Mice genetically engineered to have reduced numbers of CD206(+) M2-like macrophages show a down-regulation of TGF beta signaling in adipose tissue, together with up-regulated proliferation and differentiation of adipocyte progenitors. Our findings indicate that CD206(+) M2-like macrophages in adipose tissues create a microenvironment that inhibits growth and differentiation of adipocyte progenitors and, thereby, control adiposity and systemic insulin sensitivity.