The present article addresses the hypothesis that disturbances in skeletal muscle fatty acid handling in abdominal obesity and type 2 diabetes mellitus may play a role in the aetiology of increased adipose tissue stores, increased triacylglycerol storage in skeletal muscle and skeletal muscle insulin resistance. The uptake and/or oxidation of fatty acids have been shown to be impaired during post-absorptive conditions in abdominally-obese subjects and/or subjects with type 2 diabetes. Also, human studies have shown that muscle of subjects that are (abdominally) obese and/or have type 2 diabetes is characterized by an inability to increase fatty acid uptake and/or fatty acid oxidation during beta-adrenergic stimulation and exercise. This disturbance in fat oxidation may promote, on one hand, the development of increased adipose tissue stores and obesity. On the other hand, fatty acids that are taken up by muscle and not oxidized may increase triacylglycerol storage in muscle, which has been associated with skeletal-muscle insulin resistance. Disturbances in the capacity to increase fat oxidation during post-absorptive conditions, beta-adrenergic stimulation and exercise in subjects who are obese and/or have type 2 diabetes persist after weight reduction, indicating that the diminished fat oxidation may be a primary factor leading to the obese and/or insulin-resistant state rather than an adaptational response. Clearly, the precise sequence of events leading to an increased adiposity and insulin resistance in obesity and type 2 diabetes mellitus is not yet fully understood.