Impaired fatty acid oxidation occurs with type 2 diabetes and is associated with accumulations of intracellular lipids, which may increase diacylglycerol (DAG), stimulate protein kinase C activity, and inactivate insulin signaling. Glucose and fat metabolism are altered in burn patients, but have never been related to intracellular lipids or insulin signaling. Thirty children sustaining >40% total body surface area burns were studied acutely with glucose and palmitate tracer infusions and a hyper-insulinemic euglycemic clamp. Muscle triglyceride, DAG, fatty acyl CoA, and insulin signaling were measured. Liver and muscle triglyceride levels were measured with magnetic resonance spectroscopy. Muscle samples from healthy children were controls for DAG concentrations. Insulin sensitivity was reduced and correlated with whole body palmitate beta-oxidation (P = .004). Muscle insulin signaling was not stimulated by hyper-insulinemia. Tissue triglyceride concentrations and activated protein kinase C-beta were elevated, whereas the concentration of DAG was similar to the controls. Free fatty acid profiles of muscle triglyceride did not match DAG. Insulin resistance following burn injury is accompanied by decreased insulin signaling and increased protein kinase C-beta activation. The best metabolic predictor of insulin resistance in burned patients was palmitate oxidation.