Exposure to high fatty acids (FAs) induces whole body and skeletal muscle insulin resistance. The globular form of the adipokine, adiponectin (gAd), stimulates FA oxidation and improves insulin sensitivity; however, its ability to prevent lipid-induced insulin resistance in humans has not been tested. The purpose of this study was to determine 1) whether acute (4 h) exposure to 2 mM palmitate would impair insulin signaling and glucose transport in isolated human skeletal muscle, 2) whether muscle from obese humans is more susceptible to the effects of palmitate, and 3) whether the presence of 2 mM palmitate + 2.5 μg/ml gAd (P+gAd) could prevent the effects of palmitate. Insulin-stimulated (10 mU/ml) glucose transport was not different, relative to control, following exposure to palmitate (−10%) or P+gAd (−3%) in lean muscle. In obese muscle, the absolute increase in glucose transport from basal to insulin-stimulated conditions was significantly decreased following palmitate (−55%) and P+gAd (−36%) exposure (control vs. palmitate; control vs. P+gAd, P < 0.05). There was no difference in the absolute increase in glucose transport between palmitate and P+gAd, indicating that in the presence of palmitate, gAd did not improve glucose transport. The palmitate-induced reduction in insulin-stimulated glucose transport in muscle from obese individuals may have been due to reduced Ser Akt (control vs. palmitate; P+gAd, P < 0.05) and Akt substrate 160 (AS160) phosphorylation (control vs. palmitate; P+gAd, P < 0.05). FA oxidation was significantly increased in muscle of lean and obese individuals 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.