A strong correlation between intramyocellular lipid concentrations and the severity of insulin resistance has fueled speculation that lipid oversupply to skeletal muscle, fat, or liver may desensitize these tissues to the anabolic effects of insulin. To identify free fatty acids (FFAs) capable of inhibiting insulin action, we treated 3T3-L1 adipocytes or C2C12 myotubes with either the saturated FFA palmitate (C16:0) or the monounsaturated FFA oleate (C18:1), which were shown previously to be the most prevalent FFAs in rat soleus and gastrocnemius muscles. In C2C12 myotubes, palmitate, but not oleate, inhibited insulin-stimulation of glycogen synthesis, as well as its activation of Akt/Protein Kinase B (PKB), an obligate intermediate in the regulation of anabolic metabolism. Palmitate also induced the accrual of ceramide and diacylglycerol (DAG), two lipid metabolites that have been shown to inhibit insulin signaling in cultured cells and to accumulate in insulin resistant tissues. Interestingly, in 3T3-L1 adipocytes, neither palmitate nor oleate inhibited glycogen synthesis or Akt/PKB activation, nor did they induce ceramide or DAG synthesis. Using myotubes, we also tested whether other saturated fatty acids blocked insulin signaling while promoting ceramide and DAG accumulation. The long-chain fatty acids stearate (18:0), arachidate (20:0), and lignocerate (24:0) reproduced palmitate’s effects on these events, while saturated fatty acids with shorter hydrocarbon chains [i.e., laurate (12:0) and myristate (14:0)] failed to induce ceramide accumulation or inhibit Akt/PKB activation. Collectively these findings implicate excess delivery of long-chain fatty acids in the development of insulin resistance resulting from lipid oversupply to skeletal muscle.