Humans with obesity and insulin resistance exhibit lipid accumulation in skeletal muscle, but the underlying biological mechanisms responsible for the accumulation of lipid in the muscle of these individuals remain unknown. We investigated how plasma insulin modulates the extraction of circulating triglycerides (TGs) and non-esterified fatty acids (NEFAs) from ingested and endogenous origin in the muscle of lean, insulin-sensitive humans (Lean-IS) and contrasted these responses to those in humans with obesity and insulin resistance (Obese-IR). The studies were performed in a postprandial state associated with steady-state plasma TG concentrations. The arterio-venous blood sampling technique was employed to determine the extraction of circulating lipids across the forearm muscle before and after insulin infusion. We distinguished kinetics of TGs and NEFAs from ingested origin from those from endogenous origin across muscle by incorporating stable isotope-labeled triolein in the ingested fat. Insulin infusion rapidly suppressed the extraction of plasma TGs from endogenous, but not ingested, origin in the muscle of the Lean-IS, but this response was absent in the muscle of the Obese-IR. Furthermore, in the muscle of the Lean-IS, insulin infusion decreased the extraction of circulating NEFAs from both ingested and endogenous origin; however, this response was absent for NEFAs from ingested origin in the muscle of the Obese-IR subjects. Partitioning of circulating lipids away from the skeletal muscle when plasma insulin increases during the postprandial period is impaired in humans with obesity and insulin resistance.