Skeletal muscle constitutes 40% of body mass and takes up 80% of a glucose load. Therefore, impaired glucose removal from the circulation, such as that which occurs in obesity and type 2 diabetes, is attributable in large part to the insulin resistance in muscle. Recent research has shown that fatty acids, derived from adipose tissue, can interfere with insulin signalling in muscle. Hence, insulin-stimulated GLUT4 translocation to the cell surface is impaired, and therefore, the rate of glucose removal from the circulation into muscle is delayed. The mechanisms provoking lipid-mediated insulin resistance are not completely understood. In sedentary individuals, excess intramyocellular accumulation of triacylglycerols is only modestly associated with insulin resistance. In contrast, endurance athletes, despite accumulating large amounts of intramyocellular triacylglycerols, are highly insulin sensitive. Thus it appears that lipid metabolites, other than triacylglycerols, interfere with insulin signalling. These metabolites, however, are not expected to accumulate in athletic muscles, as endurance training increases the capacity for fatty acid oxidation by muscle. These observations, and others in severely obese individuals and type 2 diabetes patients, suggest that impaired rates of fatty acid oxidation are associated with insulin resistance. In addition, in obesity and type 2 diabetes, the rates of fatty acid transport into muscle are also increased. Thus, excess intracellular lipid metabolite accumulation, which interferes with insulin signalling, can occur as a result of impaired rates of fatty acid oxidation and/or increased rates of fatty acid transport into muscle. Accumulation of excess intramyocellular lipid can be avoided by exercise, which improves the capacity for fatty acid oxidation.