Saturated fatty acids, such as palmitate, promote accumulation of ceramide, which impairs activation and signalling of PKB (protein kinase B; also known as Akt) to important end points such as glucose transport. SPT (serine palmitoyl transferase) is a key enzyme regulating ceramide synthesis from palmitate and represents a potential molecular target in curbing lipid-induced insulin resistance. In the present study we explore the effects of palmitate upon insulin action in L6 muscle cells in which SPT expression/activity has been decreased by shRNA (small-hairpin RNA) or sustained incubation with myriocin, an SPT inhibitor. Incubation of L6 myotubes with palmitate (for 16 h) increases intramyocellular ceramide and reduces insulin-stimulated PKB activation and glucose uptake. PKB inhibition was not associated with impaired IRS (insulin receptor substrate) signalling and was ameliorated by short-term treatment with myriocin. Silencing SPT expression (∼90%) by shRNA or chronic cell incubation with myriocin (for 7 days) markedly suppressed SPT activity and palmitate-driven ceramide synthesis; however, challenging these muscle cells with palmitate still inhibited the hormonal activation of PKB. This inhibition was associated with reduced IRS1/p85-PI3K (phosphoinositide 3-kinase) coupling that arises from diverting palmitate towards greater DAG (diacylglycerol) synthesis, which elevates IRS1 serine phosphorylation via activation of DAG-sensitive PKCs (protein kinase Cs). Treatment of SPT-shRNA cells or those treated chronically with myriocin with PKC inhibitors antagonized palmitate-induced loss in insulin signalling. The findings of the present study indicate that SPT plays a crucial role in desensitizing muscle cells to insulin in response to incubation with palmitate. While short-term inhibition of SPT ameliorates palmitate/ceramide-induced insulin resistance, sustained loss/reduction in SPT expression/activity promotes greater partitioning of palmitate towards DAG synthesis, which impacts negatively upon IRS1-directed insulin signalling.