Leptin-induced increases in insulin sensitivity are well established and may be related to effects of leptin on lipid metabolism. However, the effects of leptin on levels of lipid metabolites implicated in pathogenesis of insulin resistance and effects of leptin on lipid-induced insulin resistance are unknown. The current study addressed in rats the effects of hyperleptinemia (HL) on insulin action and markers of skeletal muscle (SkM) lipid metabolism in the absence or presence of acute hyperlipidemia. Compared to controls (CONT), HL increased insulin sensitivity, as assessed by the hyperinsulinemic-euglycemic clamp (~15%), and increased SkM Akt (~30%) and GSK3 (~52%) phosphorylation. These improvements in insulin action were associated with decreased SkM triglycerides (TG, ~61%), elevated ceramides (~50%), and similar diacylglycerol (DAG) levels in HL compared to CONT. Acute hyperlipidemia in CONT decreased insulin sensitivity (~25%), and increased SkM DAG (~33%) and ceramide (~60%) levels. However, hyperlipidemia did not induce insulin resistance or SkM DAG and ceramide accumulation in HL. SkM total FAT/CD36, FABPpm, ACC phosphorylation and fatty acid oxidation were similar in HL compared to CONT. However, HL decreased SkM PKC, a kinase implicated in mediating the detrimental effects of lipids on insulin action. We conclude that increases in insulin sensitivity by HL are associated with decreased levels of SkM TG and PKC and increased SkM insulin signaling, but not with decreases in lipid metabolites implicated in altering SkM insulin sensitivity (DAG and ceramide). Furthermore, insulin resistance induced by an acute lipid infusion is prevented by HL.