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The neuroendocrine effects of leptin on metabolism hold promise to be translated into a complementary therapy to traditional insulin therapy for diabetes and obesity. However, injections of leptin can provoke inflammation. We tested the effects of leptin, produced in the physiological adipocyte location, on metabolism in mouse models of genetic and dietary obesity. We generated 3T3-L1 adipocytes constitutively secreting leptin and encapsulated them in a poly-L-lysine membrane, which protects the cells from immune rejection. Ob/ob mice (OB) were injected with capsules containing no cells (empty, OB[Emp]), adipocytes (OB[3T3]), or adipocytes overexpressing leptin (OB[Lep]) into both visceral fat depots. Leptin was found in the plasma of OB[Lep], but not OB[Emp] and OB[3T3] mice at the end of treatment (72 days). The OB[Lep] and OB[3T3] mice have transiently suppressed appetite and weight loss compared to OB[Emp]. Only OB[Lep] mice have greater brown fat mass, metabolic rate, and reduced resistin plasma levels compared to OB[Emp]. Glucose tolerance was markedly better in OB[Lep] vs. OB[Emp] and OB[3T3] mice as well as in wild type mice with high-fat diet-induced obesity and insulin resistance treated with encapsulated leptin-producing adipocytes. Our proof-of-principle study provides evidence of long-term improvement of glucose tolerance with encapsulated adipocytes producing leptin.