Peroxisome proliferator activator receptor-gamma coactivator 1 (PGC-1) is a major candidate gene for diabetes-related metabolic phenotypes, contributing to decreased expression of nuclear-encoded mitochondrial genes in muscle and adipose tissue. We have demonstrated that muscle expression of PGC-1alpha and -beta is reduced in both genetic (Lep(ob)/Lep(ob)) and acquired obesity (high fat diet). In C57BL6 mice, muscle PGC-1alpha expression decreased by 43% (p < 0.02) after 1 week of a high fat diet and persisted more than 11 weeks. In contrast, PGC-1alpha reductions were not sustained in obesity-resistant A/J mice. To identify mediators of obesity-linked reductions in PGC-1, we tested the effects of cellular nutrients in C2C12 myotubes. Although overnight exposure to high insulin, glucose, glucosamine, or amino acids had no effect, saturated fatty acids potently reduced PGC-1alpha and -beta mRNA expression. Palmitate decreased PGC-1alpha and -beta expression by 38% (p = 0.01) and 53% (p = 0.006); stearate similarly decreased expression of PGC-1alpha and -beta by 22% (p = 0.02) and 39% (p = 0.02). These effects were mediated at a transcriptional level, as indicated by an 11-fold reduction of PGC-1alpha promoter activity by palmitate and reversal of effects by histone deacetylase inhibition. Palmitate also (a) reduced expression of tricarboxylic acid cycle and oxidative phosphorylation mitochondrial genes and (b) reduced oxygen consumption. These effects were reversed by overexpression of PGC-1alpha or -beta, indicating PGC-1 dependence. Palmitate effects also required p38 MAPK, as demonstrated by 1) palmitate-induced increase in p38 MAPK phosphorylation, 2) reversal of palmitate effects on PGC-1 and mitochondrial gene expression by p38 MAPK inhibitors, and 3) reversal of palmitate effects by small interfering RNA-mediated decreases in p38alpha MAPK. These data indicate that obesity and saturated fatty acids decrease PGC-1 and mitochondrial gene expression and function via p38 MAPK-dependent transcriptional pathways.