Background and Aims: The FoxO family of Forkhead transcription factors are the key downstream targets of insulin and growth factors regulating cell survival, energy metabolism, and longevity. Under caloric restriction, FoxOs translocate to the nucleus to activate gene expression, while at postprandial stage, they are inactivated through insulin/PI3K/Akt signaling. Mammals harbor four FoxO family members, i.e. FoxO1, FoxO3, FoxO4, and FoxO6. While the studies on FoxO1 confirmed its essential metabolic function, not much is known about FoxO3. Methods: To understand the importance of FoxO3 in the liver in a time- and cell-type-specific manner, we crossed transgenic mice carrying the tetracycline-responsive transactivator under the control of the liver activator protein promotor with transgenic mice carrying a constitutively active form of the FoxO3 allele (CAFoxO3). Results: Double-transgenic mice displayed doxycycline-regulated CAFoxO3 expression in hepatocytes. Removal of doxycycline at five weeks of age led to progressive hepatic atrophy in absence of significant liver damage/inflammation. In addition, an up-regulation of several gluconeogenesis-associated genes, complete loss of glycogen and an activation of catabolic pathways in the liver as well as compensatory pancreatic islet hyperplasia was noted. At seven weeks of age, the animals showed elevated glucose levels but became hypoglycemic later on as a consequence of a beginning liver failure. The liver phenotype (i.e. hepatic atrophy, increased gluconeogenesis, early hyper- and late hypoglycemia) was completely abolished by treatment with metformin, an oral antidiabetic drug suppressing the hepatic glucose production. Conclusions: Our findings identify FoxO3 as an essential mediator of hepatic gluconeogenesis and a potential hepatic target of metformin.