Altered skeletal muscle lipid metabolism is a hallmark feature of type 2 diabetes (T2D). We investigated muscle lipid turnover in T2D versus BMI-matched control subjects (controls) and examined whether putative in vivo differences would be preserved in the myotubes. Male obese T2D individuals (n = 6) and BMI-matched controls (n = 6) underwent a hyperinsulinemic-euglycemic clamp, VO2max test, dual-energy X-ray absorptiometry scan, underwater weighing, and muscle biopsy of the vastus lateralis. 14C-palmitate and 14C-oleate oxidation rates and incorporation into lipids were measured in muscle tissue as well as in primary myotubes. Palmitate oxidation (controls: 0.99 ± 0.17 nmol/mg protein; T2D: 0.53 ± 0.07 nmol/mg protein; P = 0.03) and incorporation of fatty acids (FAs) into triacylglycerol (TAG) (controls: 0.45 ± 0.13 nmol/mg protein; T2D: 0.11 ± 0.02 nmol/mg protein; P = 0.047) were significantly reduced in muscle homogenates of T2D. These reductions were not retained for palmitate oxidation in primary myotubes (P = 0.38); however, incorporation of FAs into TAG was lower in T2D (P = 0.03 for oleate and P = 0.11 for palmitate), with a strong correlation of TAG incorporation between muscle tissue and primary myotubes (r = 0.848, P = 0.008). The data indicate that the ability to incorporate FAs into TAG is an intrinsic feature of human muscle cells that is reduced in individuals with T2D.