A population of fibro/adipogenic but non-myogenic progenitors located between skeletal muscle fibers was recently discovered. The aim of this study was to determine the extent to which these progenitors differentiate into fully functional adipocytes. The characterization of muscle progenitor-derived adipocytes is a central issue in understanding muscle homeostasis. They are considered as being the cellular origin of intermuscular adipose tissue that develops in several pathophysiological situations. Here fibro/adipogenic progenitors were isolated from a panel of 15 human muscle biopsies on the basis of the specific cell-surface immunophenotype CD15+/PDGFRα+CD56-. This allowed investigations of their differentiation into adipocytes and the cellular functions of terminally differentiated adipocytes. Adipogenic differentiation was found to be regulated by the same effectors as those regulating differentiation of progenitors derived from white subcutaneous adipose tissue. Similarly, basic adipocyte functions, such as triglyceride synthesis and lipolysis occurred at levels similar to those observed with subcutaneous adipose tissue progenitor-derived adipocytes. However, muscle progenitor-derived adipocytes were found to be insensitive to insulin-induced glucose uptake, in association with the impairment of phosphorylation of key insulin-signaling effectors. Our findings indicate that muscle adipogenic progenitors give rise to bona fide white adipocytes that have the unexpected feature of being insulin-resistant.