Abstract Body: Obesity-related metabolic disorders, including insulin resistance and type 2 diabetes, are thought to be caused by low-grade non-infectious inflammation because of lipid-mediated immune cell activation, particularly macrophages. However, it has become clear that focusing on macrophage inflammatory signaling is overly simplistic and fails to explain the complex relationship between increased immune cell recruitment to metabolic tissues and disease pathogenesis. Phenotyping of macrophages in adipose tissue demonstrates induction of a lysosomal lipid metabolism program in diet-induced obesity, suggesting that macrophage recruitment to adipose tissue might also be playing a compensatory role in settings of lipid overload. If so, then enhancing a cell-intrinsic program of lipid hydrolysis and metabolism in macrophages should have beneficial metabolic effects. TFEB is a transcriptional master regulator of a large repertoire of lysosomal, lipid metabolic, and mitochondrial genes and its overexpression in adipose tissue macrophages (ATM) could be used in this capacity. We developed macrophage-specific TFEB-transgenic mice and show that cultured macrophages and ATM isolated from the mice can induce a series of lysosomal and lipid metabolic genes including those involved in fatty acid oxidation. This enables macrophages to favor metabolism of fatty acids and lipid-rich exosomes (both of which are known to be highly secreted by adipocytes) with enhanced mitochondrial respiration. In turn, TFEB-tg macrophages have reduced lipid storage with smaller lipid droplet size and number despite the excess lipid load. The shunting of adipose tissue lipids to ATM has several systemic metabolic benefits in mice fed a high-fat diet. Macrophage-specfic TFEB-tg mice have reduced spill-over of exosomes and free fatty acids in the circulation, reduced adipose tissue mass, resistance to diet-induced obesity, and improved glucose tolerance and insulin sensitivity. Overall, our data demonstrate that coupling lysosomal lipid hydrolysis with mitochondrial lipid metabolism in ATM via TFEB produces cell-intrinsic lipid metabolism which can be leveraged to treat obesity and obesity-associated metabolic dysfunction.