Whether sex differences in intramuscular triglyceride (IMTG) metabolism underlie sex differences in the progression to diabetes are unknown. Therefore, the current study examined IMTG concentration and fractional synthesis rate (FSR) in obese men and women with normal glucose tolerance (NGT) vs. those with prediabetes (PD). PD (n = 13 men and 7 women) and NGT (n = 7 men and 12 women) groups were matched for age and anthropometry. Insulin action was quantified using a hyperinsulinemic-euglycemic clamp with infusion of [6,6-(2)H(2)]-glucose. IMTG concentration was measured by gas chromatography/mass spectrometry (GC/MS) and FSR by GC/combustion isotope ratio MS (C-IRMS), from muscle biopsies taken after infusion of [U-(13)C]palmitate during 4 h of rest. In PD men, the metabolic clearance rate (MCR) of glucose was lower during the clamp (4.71 ± 0.77 vs. 8.62 ± 1.26 ml/kg fat-free mass (FFM)/min, P = 0.04; with a trend for lower glucose rate of disappearance (Rd), P = 0.07), in addition to higher IMTG concentration (41.2 ± 5.0 vs. 21.2 ± 3.4 µg/mg dry weight, P ≤ 0.01), lower FSR (0.21 ± 0.03 vs. 0.42 ± 0.06 %/h, P ≤ 0.01), and lower oxidative capacity (P = 0.03) compared to NGT men. In contrast, no difference in Rd, IMTG concentration, or FSR was seen in PD vs. NGT women. Surprisingly, glucose Rd during the clamp was not different between NGT men and women (P = 0.25) despite IMTG concentration being higher (42.6 ± 6.1 vs. 21.2 ± 3.4 µg/mg dry weight, P = 0.03) and FSR being lower (0.23 ± 0.04 vs. 0.42 ± 0.06 %/h, P = 0.02) in women. Alterations in IMTG metabolism relate to diminished insulin action in men, but not women, in the progression toward diabetes.