Obstructive sleep apnea (OSA), independently of obesity (OBS), predisposes to insulin resistance (IR) for largely unknown reasons. Because OSA-related intermittent hypoxia triggers lipolysis, overnight increases in circulating free fatty acids (FFAs) including palmitic acid (PA) may lead to ectopic intramuscular lipid accumulation potentially contributing to IR. Using 3-T-1H-magnetic resonance spectroscopy, we therefore compared intramyocellular and extramyocellular lipid (IMCL and EMCL) in the vastus lateralis muscle at approximately 7 am between 26 male patients with moderate-to-severe OSA (17 obese, 9 nonobese) and 23 healthy male controls (12 obese, 11 nonobese). Fiber type composition was evaluated by muscle biopsies. Moreover, we measured fasted FFAs including PA, glycated hemoglobin A1c, thigh subcutaneous fat volume (ScFAT, 1.5-T magnetic resonance tomography), and maximal oxygen uptake (VO2max). Fourteen patients were reassessed after continuous positive airway pressure (CPAP) therapy. Total FFAs and PA were significantly (by 178% and 166%) higher in OSA patients vs controls and correlated with the apnea-hypopnea index (AHI) (r ≥ 0.45, P < .01). Moreover, IMCL and EMCL were 55% (P < .05) and 40% (P < .05) higher in OSA patients, that is, 114% and 103% in nonobese, 24.4% and 8.4% in obese participants (with higher control levels). Overall, PA, FFAs (minus PA), and ScFAT significantly contributed to IMCL (multiple r = 0.568, P = .002). CPAP significantly decreased EMCL (–26%) and, by trend only, IMCL, total FFAs, and PA. Muscle fiber composition was unaffected by OSA or CPAP. Increases in IMCL and EMCL are detectable at approximately 7 am in OSA patients and are partly attributable to overnight FFA excesses and high ScFAT or body mass index. CPAP decreases FFAs and IMCL by trend but significantly reduces EMCL.