Leptin-induced increases in insulin sensitivity are well established and may be related to the effects of leptin on lipid metabolism. However, the effects of leptin on the levels of lipid metabolites implicated in pathogenesis of insulin resistance and the effects of leptin on lipid-induced insulin resistance are unknown. The current study addressed in rats the effects of hyperleptinemia (HL) on insulin action and markers of skeletal muscle (SkM) lipid metabolism in the absence or presence of acute hyperlipidemia induced by an infusion of a lipid emulsion. Compared with controls (CONT), HL increased insulin sensitivity, as assessed by hyperinsulinemic-euglycemic clamp (∼15%), and increased SkM Akt (∼30%) and glycogen synthase kinase 3α (∼52%) phosphorylation. These improvements in insulin action were associated with decreased SkM triglycerides (TG; ∼61%), elevated ceramides (∼50%), and similar diacylglycerol (DAG) levels in HL compared with CONT. Acute hyperlipidemia in CONT decreased insulin sensitivity (∼25%) and increased SkM DAG (∼33%) and ceramide (∼60%) levels. However, hyperlipidemia did not induce insulin resistance or SkM DAG and ceramide accumulation in HL. SkM total fatty acid transporter CD36, plasma membrane fatty acid binding protein, acetyl Co-A carboxylase phosphorylation, and fatty acid oxidation were similar in HL compared with CONT. However, HL decreased SkM protein kinase Cθ (PKCθ), a kinase implicated in mediating the detrimental effects of lipids on insulin action. We conclude that increases in insulin sensitivity induced by HL are associated with decreased levels of SkM TG and PKCθ and increased SkM insulin signaling, but not with decreases in other lipid metabolites implicated in altering SkM insulin sensitivity (DAG and ceramide). Furthermore, insulin resistance induced by an acute lipid infusion is prevented by HL.