Consumption of a Western diet rich in saturated fats is associated with obesity and insulin resistance. In some insulin-resistant phenotypes this is associated with accumulation of skeletal muscle fatty acids. We examined the effects of diets high in saturated fatty acids (Sat) or n-6 polyunsaturated fatty acids (PUFA) on skeletal muscle fatty acid metabolite accumulation and whole-body insulin sensitivity. Male Sprague-Dawley rats were fed a chow diet (16% calories from fat, Con) or a diet high (53%) in Sat or PUFA for 8 wk. Insulin sensitivity was assessed by fasting plasma glucose and insulin and glucose tolerance via an oral glucose tolerance test. Muscle ceramide and diacylglycerol (DAG) levels and triacylglycerol (TAG) fatty acids were also measured. Both high-fat diets increased plasma free fatty acid levels by 30%. Compared with Con, Sat-fed rats were insulin resistant, whereas PUFA-treated rats showed improved insulin sensitivity. Sat caused a 125% increase in muscle DAG and a small increase in TAG. Although PUFA also resulted in a small increase in DAG, the excess fatty acids were primarily directed toward TAG storage (105% above Con). Ceramide content was unaffected by either high-fat diet. To examine the effects of fatty acids on cellular lipid storage and glucose uptake in vitro, rat L6 myotubes were incubated for 5 h with saturated and polyunsaturated fatty acids. After treatment of L6 myotubes with palmitate (C16:0), the ceramide and DAG content were increased by two- and fivefold, respectively, concomitant with reduced insulin-stimulated glucose uptake. In contrast, treatment of these cells with linoleate (C18:2) did not alter DAG, ceramide levels, and glucose uptake compared with controls (no added fatty acids). Both 16:0 and 18:2 treatments increased myotube TAG levels (C18:2 vs. C16:0, P < 0.05). These results indicate that increasing dietary Sat induces insulin resistance with concomitant increases in muscle DAG. Diets rich in n-6 PUFA appear to prevent insulin resistance by directing fat into TAG, rather than other lipid metabolites.