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Elevated expression/activity of adipose triglyceride lipase (ATGL) and/or reduced activity of hormone-sensitive lipase (HSL) in skeletal muscle are causally linked to insulin resistance in vitro. We investigated here the effect of high-fat feeding on skeletal muscle lipolytic proteins, lipotoxicity, and insulin signaling in vivo. Five-week-old C3H mice were fed normal chow diet (NCD) or 45% kcal high-fat diet (HFD) for 4 weeks. Wild-type and HSL knockout mice fed NCD were also studied. Whole-body and muscle insulin sensitivity, as well as lipolytic protein expression, lipid levels, and insulin signaling in skeletal muscle, were measured. HFD induced whole-body insulin resistance and glucose intolerance and reduced skeletal muscle glucose uptake compared with NCD. HFD increased skeletal muscle total diacylglycerol (DAG) content, protein kinase Cθ and protein kinase Cε membrane translocation, and impaired insulin signaling as reflected by a robust increase of basal Ser1101 insulin receptor substrate 1 phosphorylation (2.8-fold, P < .05) and a decrease of insulin-stimulated v-Akt murine thymoma viral oncogene homolog Ser473 (−37%, P < .05) and AS160 Thr642 (−47%, P <.01) phosphorylation. We next showed that HFD strongly reduced HSL phosphorylation at Ser660. HFD significantly up-regulated the muscle protein content of the ATGL coactivator comparative gene identification 58 and triacylglycerol hydrolase activity, despite a lower ATGL protein content. We further show a defective skeletal muscle insulin signaling and DAG accumulation in HSL knockout compared with wild-type mice. Together, these data suggest a pathophysiological link between altered skeletal muscle lipase expression and DAG-mediated insulin resistance in mice.