Obesity, and the associated disturbed glycerolipid/fatty acid (GL/FA) cycle, contribute to insulin resistance, islet β-cell failure, and type 2 diabetes. Flux through the GL/FA cycle is regulated by the availability of glycerol-3-phosphate (Gro3P) and fatty acyl-CoA. We describe here amammalian Gro3P phosphatase (G3PP), which was not known to exist in mammalian cells, that can directly hydrolyze Gro3P to glycerol. We identified that mammalian phosphoglycolate phosphatase, with an uncertain function, acts in fact as a G3PP. We found that G3PP, by controlling Gro3P levels, regulates glycolysis and glucose oxidation, cellular redox and ATP production, gluconeogenesis, glycerolipid synthesis, and fatty acid oxidation in pancreatic islet β-cells and hepatocytes, and that glucose stimulated insulin secretion and the response tometabolic stress, e.g., glucolipotoxicity, in β-cells. In vivo overexpression of G3PP in rat liver lowers body weight gain and hepatic glucose production from glycerol and elevates plasma HDL levels. G3PP is expressed at various levels in different tissues, and its expression varies according to the nutritional state in some tissues. As Gro3P lies at the crossroads of glucose, lipid, and energy metabolism, control of its availability by G3PP adds a key level of metabolic regulation in mammalian cells, and G3PP offers a potential target for type 2 diabetes and cardiometabolic disorders.