Skeletal muscle contains the majority of the body's glycogen stores and a similar amount of readily accessible energy as intramyocellular triglyceride (imTG). While a number of factors have been considered to contribute to the pathogenesis of insulin resistance (IR) in obesity and type 2 diabetes mellitus (DM), this review will focus on the potential role of skeletal muscle triglyceride content. In obesity and type 2 DM, there is an increased content of lipid within and around muscle fibers. Changes in muscle in fuel partitioning of lipid, between oxidation and storage of fat calories, almost certainly contribute to accumulation of imTG and to the pathogenesis of both obesity and type 2 DM. In metabolic health, skeletal muscle physiology is characterized by the capacity to utilize either lipid or carbohydrate fuels, and to effectively transition between these fuels. We will review recent findings that indicate that in type 2 DM and obesity, skeletal muscle manifests inflexibility in the transition between lipid and carbohydrate fuels. This inflexibility in fuel selection by skeletal muscle appears to be related to the accumulation of imTG and is an important aspect of IR of skeletal muscle in obesity and type 2 DM.