Diabetic cardiomyopathy is a secondary complication of diabetes with an unclear etiology. Based on a functional genomic evaluation of obesity-associated cardiac gene expression, we previously identified and cloned the gene encoding apolipoprotein O (APOO), which is overexpressed in hearts from diabetic patients. Here, we generated APOO-Tg mice, transgenic mouse lines that expresses physiological levels of human APOO in heart tissue. APOO-Tg mice fed a high-fat diet exhibited depressed ventricular function with reduced fractional shortening and ejection fraction, and myocardial sections from APOO-Tg mice revealed mitochondrial degenerative changes. In vivo fluorescent labeling and subcellular fractionation revealed that APOO localizes with mitochondria. Furthermore, APOO enhanced mitochondrial uncoupling and respiration, both of which were reduced by deletion of the N-terminus and by targeted knockdown of APOO. Consequently, fatty acid metabolism and ROS production were enhanced, leading to increased AMPK phosphorylation and Ppara and Pgc1a expression. Finally, we demonstrated that the APOO-induced cascade of events generates a mitochondrial metabolic sink whereby accumulation of lipotoxic byproducts leads to lipoapoptosis, loss of cardiac cells, and cardiomyopathy, mimicking the diabetic heart-associated metabolic phenotypes. Our data suggest that APOO represents a link between impaired mitochondrial function and cardiomyopathy onset, and targeting APOO-dependent metabolic remodeling has potential as a strategy to adjust heart metabolism and protect the myocardium from impaired contractility.