Individuals with insulin resistance and type 2 diabetes have an impaired ability to switch appropriately between carbohydrate and fatty acid oxidation. However, whether this is a cause or consequence of insulin resistance is unclear, and the mechanism(s) involved in this response is not completely elucidated. Whole-body fat oxidation and transcriptional regulation of genes involved in lipid metabolism in skeletal muscle were measured after a prolonged fast and after consumption of either high-fat (76%) or high-carbohydrate (76%) meals in individuals with no family history of type 2 diabetes (control, n = 8) and in age- and fatness-matched individuals with a strong family history of type 2 diabetes (n = 9). Vastus lateralis muscle biopsies were performed before and 3 h after each meal. Insulin sensitivity and fasting measures of fat oxidation were not different between groups. However, subjects with a family history of type 2 diabetes had an impaired ability to increase fatty acid oxidation in response to the high-fat meal (P < 0.05). This was related to impaired activation of genes involved in lipid metabolism, including those for peroxisome proliferator-activated receptor coactivator-1alpha (PGC1alpha) and fatty acid translocase (FAT)/CD36 (P < 0.05). Of interest, adiponectin receptor-1 expression decreased 23% after the high-fat meal in both groups, but it was not changed after the high-carbohydrate meal. In conclusion, an impaired ability to increase fatty acid oxidation precedes the development of insulin resistance in genetically susceptible individuals. PGC1alpha and FAT/CD36 are likely candidates in mediating this response.