Both obesity and sarcopenia are frequently associated in ageing, and together may promote the progression of related conditions such as diabetes and frailty. However, little is known about the pathophysiological mechanisms underpinning this association. Here we uncover dysregulated systemic alanine metabolism and hyper-expression of the alanine transaminases (ALT) in the liver of obese/diabetic mice and humans. Hepatocyte-selective silencing of both ALT enzymes revealed a clear role in systemic alanine clearance which related to glycemic control. In obese/diabetic mice, not only did silencing both ALT enzymes retard hyperglycemia, but also reversed skeletal muscle atrophy. This was due to a rescue of depressed skeletal muscle protein synthesis, with a liver-skeletal muscle amino acid metabolic crosstalk exemplified by ex vivo experiments. Mechanistically, chronic liver glucocorticoid and glucagon signaling driven liver alanine catabolism promoted hyperglycemia and skeletal muscle wasting. Taken together, here we reveal an endocrine-hepato-muscular metabolic cycle linking hyperglycemia and skeletal muscle atrophy in type 2 diabetes.