Obesity is associated with the development of insulin resistance, which is a central feature of the pathophysiology of type 2 diabetes. While the mechanisms responsible for the development of insulin resistance are not fully defined, there is compelling evidence for a causative role for defective lipid metabolism (1) and subclinical inflammation (2). It is widely accepted that the intracellular accumulation of ceramide causes inflammation and insulin resistance (3). Recent clinical data indicate that circulating ceramides correlate with systemic insulin resistance and inflammation (4); however, there is no evidence for a direct effect of circulating ceramide on peripheral insulin action and inflammation. Accordingly, we explored the role of circulating ceramide on the pathogenesis of insulin resistance. Plasma ceramides were examined in age-matched lean, insulin sensitive; obese, insulin sensitive and obese individuals with, type 2 diabetes (T2DM). Almost all circulating ceramide was transported in lipoproteins. Ceramide transported in low density lipoproteins (LDL) accounted for ~40% of the plasma ceramide and LDL-ceramide levels in T2DM was increased by 51 and 72% compared with lean and obese subjects, respectively. LDL-ceramide correlated with insulin resistance (r=0.43, P=0.01, n=22). To pursue the biology of circulating ceramides, we created a reconstituted LDL preparation, with or without the addition of ceramide (LDL 43 μg/ml; ceramide 2.1 ± 0.3 μmol/L). Reconstituting ceramide in LDL reduced insulin stimulated glucose uptake, Akt phosphorylation and GLUT4 translocation in cultured myotubes and this was associated with increased LDL-ceramide uptake. There was no evidence of inflammation in myotubes in vitro. Next, we demonstrated that LDL-ceramide induced a shift towards a pro-inflammatory profile in macrophages, which was due to both the uptake / metabolism of ceramide and activation of toll-like receptor signalling. To elucidate the physiological role of LDL-ceramide in vivo, we infused LDL-ceramide into the jugular vein of lean C57Bl/6 mice 24 h before assessing insulin-stimulated glucose transport using intravenous co-administration of 0.5U/kg insulin and 2-[1-3H] deoxyglucose (10 μCi). LDL-ceramide induced pro-inflammatory signalling and decreased insulin signalling in skeletal muscle, and reduced whole-body insulin stimulated glucose uptake. The impaired insulin action was specific to skeletal muscle. In summary, these data support a role for plasma ceramides in the development of skeletal muscle insulin resistance and macrophage inflammation, findings that support the hypothesis that ceramide signals generated both from within skeletal muscle and those circulating in LDL contribute to the development of whole body insulin resistance.