The relationship between glucose and lipid metabolism has been of significant interest in understanding the pathogenesis of obesity-induced insulin resistance. To gain insight into this metabolic paradigm, we explored the potential interplay between cellular glucose flux and lipid-induced metabolic dysfunction within skeletal muscle. Here we show that palmitate-induced insulin resistance and pro-inflammation in muscle cells, which is associated with reduced mitochondrial integrity and oxidative capacity, can be attenuated under conditions of glucose-withdrawal or glycolytic inhibition using 2-deoxyglucose (2DG). Importantly, these glucopenic-driven improvements coincide with the preservation of mitochondrial function, and are dependent on palmitate oxidation which becomes markedly enhanced in the absence of glucose. Intriguingly, despite its ability to upregulate mitochondrial palmitate oxidation, glucose withdrawal did not attenuate palmitate-induced increases in total intramyocellular diacylglycerol and ceramide. Furthermore, consistent with our findings in cultured muscle cells, we also report enhanced insulin sensitivity and reduced pro-inflammatory tone in soleus muscle from obese Zucker rats fed a 2DG-supplemented diet. Notably, this improved metabolic status following 2DG dietary intervention is associated with markedly reduced plasma free fatty acids. Collectively, our data highlights the key role that mitochondrial substrate availability plays in lipid-induced metabolic dysregulation both in vitro and in vivo.