Exposure to high fatty acids (FA) induces whole body and muscle insulin resistance. Adiponectin (gAd) stimulates FA oxidation, and improves insulin sensitivity; however, its ability to prevent lipid-induced insulin resistance in humans is untested. The purpose of this study was to determine (i) whether acute (4 hr) exposure to 2mM palmitate (P) would impair insulin signaling and glucose transport in isolated human skeletal muscle, (ii) if muscle from obese humans is more susceptible to the effects of P and (iii) if the presence of 2.5 µg/mL gAd (P+gAd) could prevent the effects of P. Insulin-stimulated (10 mU/mL) glucose transport was not different relative to control (C), following exposure to P (-10%) or P+gAd (-3%) in lean. In obese muscle the absolute increase in glucose transport from basal to insulin-stimulated conditions was significantly decreased following P (-55%) and P+gAd (-36%) exposure (C vs. P; C vs. P+gAd, p<0.05). There was no difference in the absolute increase in glucose transport between P and P+gAd, indicating that in the presence of P, gAd did not improve glucose transport. The palmitate-induced reduction in insulin-stimulated glucose transport in muscle from obese may have been due to reduced Ser Akt (C vs. P ; P+gAd, p<0.05) and AS160 phosphorylation (C vs. P; P+gAd, p<0.05). Fatty acid oxidation was significantly increased in muscle of lean and obese in the presence of gAd (p<0.05) suggesting that the stimulatory effects of gAd on FA oxidation may not be sufficient to entirely prevent palmitate-induced insulin resistance in obese muscle.