Recent evidence has shown that alterations in dorsomedial hypothalamic (DMH) neuropeptide Y (NPY) signaling influence glucose homeostasis, but the mechanism through which DMH NPY acts to affect glucose homeostasis remains unclear. Here we report that DMH NPY descending signals to the dorsal motor nucleus of the vagus (DMV) modulate hepatic insulin sensitivity to control hepatic glucose production in rats. Using the hyperinsulinemic-euglycemic clamp, we revealed that knockdown of NPY in the DMH by adeno-associated virus-mediated NPY-specific RNAi promoted insulin’s action on suppression of hepatic glucose production. This knockdown silenced DMH NPY descending signals to the DMV, leading to an elevation of hepatic vagal innervation. Hepatic vagotomy abolished the inhibitory effect of DMH NPY knockdown on hepatic glucose production, but this glycemic effect was not affected by vagal deafferentation. Together, these results demonstrate a distinct role for DMH NPY in the regulation of glucose homeostasis through the hepatic vagal efferents and insulin action on hepatic glucose production.