In the setting of insulin resistance, agonists of peroxisome proliferator-activated receptor (PPAR)-gamma restore insulin action in muscle and promote lipid redistribution. Mice with muscle-specific knockout of PPARgamma (MuPPARgammaKO) develop excess adiposity, despite reduced food intake and normal glucose disposal in muscle. To understand the relation between muscle PPARgamma and lipid accumulation, we studied the fuel energetics of MuPPARgammaKO mice. Compared with controls, MuPPARgammaKO mice exhibited significantly increased ambulatory activity, muscle mitochondrial uncoupling, and respiratory quotient. Fitting with this latter finding, MuPPARgammaKO animals compared with control siblings exhibited a 25% reduction in the uptake of the fatty acid tracer 2-bromo-palmitate (P < 0.05) and a 13% increase in serum nonesterified fatty acids (P = 0.05). These abnormalities were associated with no change in AMP kinase (AMPK) phosphorylation, AMPK activity, or phosphorylation of acetyl-CoA carboxylase in muscle and occurred despite increased expression of fatty acid transport protein 1. Palmitate oxidation was not significantly altered in MuPPARgammaKO mice despite the increased expression of several genes promoting lipid oxidation. These data demonstrate that PPARgamma, even in the absence of exogenous activators, is required for normal rates of fatty acid uptake in oxidative skeletal muscle via mechanisms independent of AMPK and fatty acid transport protein 1. Thus, when PPARgamma activity in muscle is absent or reduced, there will be decreased fatty acid disposal leading to diminished energy utilization and ultimately adiposity.