AMP-activated protein kinase (AMPK) is a master regulator of cellular energy homeostasis and a therapeutic target for metabolic diseases. Co/post-translational N-myristoylation of glycine-2 (Gly2) of the AMPK β subunit has been suggested to regulate the distribution of the kinase between the cytosol and membranes through a “myristoyl switch” mechanism. However, the relevance of AMPK myristoylation for metabolic signaling in cells and in vivo is unclear. Here, we generated knockin mice with a Gly2-to-alanine point mutation of AMPKβ1 (β1-G2A). We demonstrate that non-myristoylated AMPKβ1 has reduced stability but is associated with increased kinase activity and phosphorylation of the Thr172 activation site in the AMPK α subunit. Using proximity ligation assays, we show that loss of β1 myristoylation impedes colocalization of the phosphatase PPM1A/B with AMPK in cells. Mice carrying the β1-G2A mutation have improved metabolic health with reduced adiposity, hepatic lipid accumulation, and insulin resistance under conditions of high-fat diet-induced obesity.