An alarming increase in the prevalence of obesity, type 2 diabetes mellitus, and associated diseases can be observed world-wide during the past 20 years. In obesity, profound alterations in the secretion profile of adipokines and inflammatory markers as well as increased lipolysis occur, leading besides other events to elevated levels of free fatty acids, which in turn are distributed to nonadipose tissue such as skeletal muscle. While the amount of intramyocellular lipids can be used as a marker of insulin resistance in physical inactive individuals, these neutral triglycerides themselves are not thought to be harmful. However, they provide a source for the generation of harmful lipid metabolites such as diacylglycerol and ceramide, which are implicated in insulin resistance by perturbing insulin signaling pathways. In this review, we will discuss the role of lipid metabolites in insulin resistance and potential mechanism involved in accumulation of intramyocellular lipids. Furthermore, we will highlight the key role of PGC-1α, which is a master regulator of mitochondrial biogenesis and coordinates the activation of genes involved in oxidative energy production as well as genes involved in fiber type transformation. Finally, the role of exercise in stimulating PGC-1α activity and expression as well as the release of contraction-induced myokines is discussed.