Here we report that in skeletal muscle cells the contribution to insulin resistance and inflammation of two common dietary long-chain fatty acids depends on the channeling of these lipids to distinct cellular metabolic fates. Exposure of cells to the saturated fatty acid palmitate led to enhanced diacylglycerol levels and the consequent activation of the protein kinase C theta/nuclear factor kappa B pathway, finally resulting in enhanced interleukin 6 secretion and down-regulation of the expression of genes involved in the control of the oxidative capacity of skeletal muscle (peroxisome proliferator-activated receptor (PPAR)gamma-coactivator 1 alpha) and triglyceride synthesis (acyl-coenzyme A: diacylglycerol acyltransferase 2). In contrast, exposure to the monounsaturated fatty acid oleate did not lead to these changes. Interestingly, co-incubation of cells with palmitate and oleate reversed both inflammation and impairment of insulin signaling by channeling palmitate into triglycerides and by up-regulating the expression of genes involved in mitochondrial beta-oxidation, thus reducing its incorporation into diacylglycerol. Our findings support a model of cellular lipid metabolism in which oleate protects against palmitate-induced inflammation and insulin resistance in skeletal muscle cells by promoting triglyceride accumulation and mitochondrial beta-oxidation through PPAR alpha- and protein kinase A-dependent mechanisms.