Obese and type 2 diabetic (T2DM) adolescents present with reduced insulin-stimulated glucose disposal and elevated intramyocellular lipids (IMCL) indicating comparable muscular insulin resistance and increased flux of free fatty acids (FFA) as in adult patients. In humans, the causal relationships between obesity and insulin resistance were examined in detail over the last years. The impact of genetic factors was analyzed in young nonobese nondiabetic first-degree relatives of T2DM (REL-DM), whereas environmental factors were tested by challenging humans without genetic T2DM risk with lipid infusions or high-fat diets. REL-DM exhibit defects in mitochondrial oxidation and phosphorylation. Increased FFA availability results in accumulation of intramyocellular fatty acyl-CoA (FA-CoA) inducing a series of alterations: (i) inhibition of insulin signaling, (ii) reduction of insulin-(in)dependent glucose transport/phosphorylation, (iii) decreased insulin-stimulated glycogen synthesis, (iv) impaired insulin-stimulated oxidative phosphorylation (ATP synthesis), (v) accumulation of ectopic triglycerides (IMCL), (vi) reduced expression of peroxisome proliferator activated receptor gamma (PPARgamma) coactivator-1 (PGC-1) and PGC-1-controlled genes involved in mitochondrial biogenesis and oxidative phosphorylation and possibly also (vii) initiation of inflammatory processes by activation of PKC and nuclear factor-kappaB and decreased expression of matrix metalloproteinases (MMPs). The abnormalities could lead to a vicious cycle in which mitochondrial dysfunction, elevation of intramycellular lipids, impaired lipid oxidation and insulin resistance amplify each other. This is similar to the adaptive changes to fasting, which prevent energy loss during excessive FFA availability. The sequence of events may start with mitochondrial dysfunction in genetic insulin resistance and with increased intramyocellular lipids in environmental insulin resistance.