Phenotypic analyses of mice null for the individual Akt isoforms suggested that they are functionally distinct and that only Akt2 plays a role in diabetes. We show here that Akt isoforms play compensatory and complementary roles in glucose homeostasis and diabetes. Insulin resistance in Akt2^−/− mice was inhibited by haplodeficiency of Pten, suggesting that other Akt isoforms can compensate for Akt2 function. Haplodeficiency of Akt1 in Akt2^−/− mice, however, converts prediabetes to overt type 2 diabetes, which is also reversed by haplodeficiency of Pten. Akt3 does not appear to contribute significantly to diabetes. Overt type 2 diabetes in Akt1^+/− Akt2^−/− mice is manifested by hyperglycemia due to beta-cell dysfunction combined with impaired glucose homeostasis due to markedly decreased leptin levels. Restoring leptin levels was sufficient to restore normal blood glucose and insulin levels in Akt1^+/− Akt2^−/− and Akt2^−/− mice, suggesting that leptin-deficiency is the predominant cause of diabetes in these mice. These results uncover a new mechanism linking Akt to diabetes, provide a therapeutic strategy, and show that diabetes induced as a consequence of cancer therapy, via Akt inhibition, could be reversed by leptin therapy.