With the increasing prevalence of obesity, research has focused on the molecular mechanism(s) linking obesity and skeletal muscle insulin resistance. Metabolic alterations within muscle, such as changes in the cellular location of fatty acid transporter proteins, decreased mitochondrial enzyme activity, and defects in mitochondrial morphology, likely contribute to obesity and insulin resistance. These defects are thought to play a role in the reduced skeletal muscle fatty acid oxidation and increased intramuscular lipid (IMCL) accumulation that is apparent with obesity and other insulin-resistant states such as type 2 diabetes. Intramuscular triacylglycerol does not appear to be a ubiquitous marker of insulin resistance, although specific IMCL intermediates such as long-chain fatty acyl-CoAs, ceramide, and diacylglycerol may inhibit insulin signal transduction. In this review, we will briefly summarize the defects in skeletal muscle lipid metabolism associated with obesity, and discuss the proposed mechanisms by which these defects may contribute to insulin resistance.