Obesity and insulin resistance are related to both enlarged intramyocellular triacylglycerol stores and accumulation of lipid intermediates. We investigated how lipid overflow can change the oxidation of intramyocellular lipids (ICL_OX) and intramyocellular lipid storage (ICL). These experiments were extended by comparing these processes in primary cultured myotubes established from healthy lean and obese type 2 diabetic (T2D) individuals, two extremes in a range of metabolic phenotypes. ICLs were prelabeled for 2 days with 100 μM [¹⁴C]oleic acid (OA). ICL_OX was studied using a ¹⁴CO₂ trapping system and measured under various conditions of extracellular OA (5 or 100 μM) and glucose (0.1 or 5.0 mM) and the absence or presence of mitochondrial uncoupling [carbonyl cyanide p-trifluoromethoxyphenylhydrazone (FCCP)]. First, increased extracellular OA availability (5 vs. 100 μM) reduced ICL_OX by 37%. No differences in total lipolysis were observed between low and high OA availability. Uncoupling with FCCP restored ICL_OX to basal levels during high OA availability. Mitochondrial mass was positively related to ICL_OX, but only in myotubes from lean individuals. In all, a lower mitochondrial mass and lower ICL_OX were related to a higher cell-associated OA accumulation. Second, myotubes established from obese T2D individuals showed reduced ICL_OX. ICL_OX remained lower during uncoupling ( P < 0.001), even with comparable mitochondrial mass, suggesting decreased mitochondrial function. Furthermore, the variation in ICL_OX in vitro was significantly related to the in vivo fasting respiratory quotient of all subjects ( P < 0.02). In conclusion, the rate of ICL_OX is dependent on the availability of extracellular fatty acids and mitochondrial function rather than mitochondrial mass.