Muscle is of particular importance for glucose homeostasis, since in healthy subjects it accounts for 80-90% of postprandial insulin-stimulated glucose disposal. After cellular uptake of glucose by the specialized glucose transporter 4 (GLUT4), glucose is phosphorylated and stored as glycogen. In individuals with obesity or T2D, the capacity for insulin to facilitate glucose uptake and glycogen synthesis is impaired. This reduced response of a given insulin concentration to exert its biological effect is termed insulin resistance. Subsequent diminished insulin secretion due to β-cell failure results in fasting hyperglycemia and overt diabetes. Importantly, muscle insulin resistance is the initial defect occurring in the development of T2D and precedes the clinical development of the disease by up to 20 years. Intracellular defects in glucose transport have been identified as the limiting step for insulin-mediated glucose uptake into skeletal muscle. Impaired muscle glucose transport activity is likely a consequence of ectopic lipid accumulation and subsequent dysregulation of intramyocellular fatty acid metabolism. Indeed, results from normal weight, nondiabetic adults suggest that intramyocellular triglyceride content is a strong predictor for muscle insulin resistance. Of note, the development of insulin resistance occurred without changes in intramyocellular triglyceride content, thus dissociating the amount of these neutral storage lipids from insulin resistance. Instead, the bioactive lipid species diacylglycerols (DAG) and ceramides have been implicated in interfering with insulin signaling and glucose homeostasis in obese and insulin resistant individuals and individuals with T2D by activating members of the protein kinase C (PKC) family while ceramides mediate an increase in protein phosphatase 2A (PP2A) and an association of PKCζ and protein kinase B (PKB)/Akt2. To add another layer of complexity, DAGs seem to exert their detrimental intracellular effects in a subspecies- (mostly C18:0, C18:1, or C18:2 DAGs) and stereo-selective manner (sn-1,2 stereoisomer DAG). Taken together, excessive amounts of bioactive intramyocellular lipids (IMCLs) contribute to defective insulin signaling in obese individuals and patients with T2D. Surprisingly, endurance athletes have comparable amounts of IMCLs, but remain highly insulin sensitive. This metabolic conundrum has been termed "athlete's paradox".