We investigated the effects of obesity surgery-induced weight loss on transcription factor 7-like 2 gene (TCF7L2) alternative splicing in adipose tissue and liver. Furthermore, we determined the association of TCF7L2 splicing with the levels of plasma glucose and serum free fatty acids (FFAs) in three independent studies (n = 216). Expression of the short mRNA variant, lacking exons 12, 13, and 13a, decreased after weight loss in subcutaneous fat (n = 46) and liver (n = 11) and was more common in subcutaneous fat of subjects with type 2 diabetes than in subjects with normal glucose tolerance in obese individuals (n = 54) and a population-based sample (n = 49). Additionally, there was a positive correlation between this variant and the level of fasting glucose in nondiabetic individuals (n = 113). This association between TCF7L2 splicing and plasma glucose was independent of the TCF7L2 genotype. Finally, this variant was associated with high levels of serum FFAs during hyperinsulinemia, suggesting impaired insulin action in adipose tissue, whereas no association with insulin secretion or insulin-stimulated whole-body glucose uptake was observed. Our study shows that the short TCF7L2 mRNA variant in subcutaneous fat is regulated by weight loss and is associated with hyperglycemia and impaired insulin action in adipose tissue.