Intracellular ceramide accumulation in specific cellular compartments is a potential mechanism explaining muscle insulin resistance in the pathogenesis of type 2 diabetes. Muscle sarcolemmal ceramide accumulation negatively impacts insulin sensitivity in humans, but the mechanism explaining this localised accumulation is unknown. Previous reports revealed that circulating oxidised LDL is elevated in serum of individuals with obesity and type 2 diabetes. Oxidised phosphatidylcholine, which is present in oxidised LDL, has previously been linked to ceramide pathway activation, and could contribute to localised ceramide accumulation in skeletal muscle. We hypothesised that oxidised phosphatidylcholine inversely correlates with insulin sensitivity in serum, and induces sarcolemmal ceramide accumulation and decreases insulin sensitivity in muscle. We used LC-MS/MS to quantify specific oxidised phosphatidylcholine species in serum from a cross-sectional study of 58 well-characterised individuals spanning the physiological range of insulin sensitivity. We also performed in vitro experiments in rat L6 myotubes interrogating the role of specific oxidised phosphatidylcholine species in promoting sarcolemmal ceramide accumulation, inflammation and insulin resistance in skeletal muscle cells. Human serum oxidised phosphatidylcholine levels are elevated in individuals with obesity and type 2 diabetes, inversely correlated with insulin sensitivity, and positively correlated with sarcolemmal C18:0 ceramide levels in skeletal muscle. Specific oxidised phosphatidylcholine species, particularly 1-palmitoyl-2-(5-oxovaleroyl)-sn-glycero-3-phosphocholine (POVPC), increase total ceramide and dihydroceramide and decrease total sphingomyelin in the sarcolemma of L6 myotubes by de novo ceramide synthesis and sphingomyelinase activation. POVPC also increases inflammatory signalling and causes insulin resistance in L6 myotubes. These data suggest that circulating oxidised phosphatidylcholine species promote ceramide accumulation and decrease insulin sensitivity in muscle, help explain localised sphingolipid accumulation and muscle inflammatory response, and highlight oxidised phosphatidylcholine species as potential targets to combat insulin resistance.