Leptin stimulates fatty acid oxidation in skeletal muscle through the activation of AMP-activated protein kinase (AMPK) and the induction of gene expression, such as that for peroxisome proliferator-activated receptor alpha (PPARalpha). We now show that leptin stimulates fatty acid oxidation and PPARalpha gene expression in the C2C12 muscle cell line through the activation of AMPK containing the alpha2 subunit (alpha2AMPK) and through changes in the subcellular localization of this enzyme. Activated alpha2AMPK containing the beta1 subunit was shown to be retained in the cytoplasm, where it phosphorylated acetyl coenzyme A carboxylase and thereby stimulated fatty acid oxidation. In contrast, alpha2AMPK containing the beta2 subunit transiently increased fatty acid oxidation but underwent rapid translocation to the nucleus, where it induced PPARalpha gene transcription. A nuclear localization signal and Thr(172) phosphorylation of alpha2 were found to be essential for nuclear translocation of alpha2AMPK, whereas the myristoylation of beta1 anchors alpha2AMPK in the cytoplasm. The prevention of alpha2AMPK activation and the change in its subcellular localization inhibited the metabolic effects of leptin. Our data thus suggest that the activation of and changes in the subcellular localization of alpha2AMPK are required for leptin-induced stimulation of fatty acid oxidation and PPARalpha gene expression in muscle cells.