Insulin resistance is the best predictor for the development of diabetes in offspring of type 2 diabetic patients, but the mechanism responsible for it remains unknown. Recent studies have demonstrated increased intramyocellular lipid, decreased mitochondrial ATP synthesis, and decreased mitochondrial density in the muscle of lean, insulin-resistant offspring of type 2 diabetic patients. These data suggest an important role for mitochondrial dysfunction in the pathogenesis of type 2 diabetes. To further explore this hypothesis, we assessed rates of substrate oxidation in the muscle of these same individuals using ¹³C magnetic resonance spectroscopy (MRS). Young, lean, insulin-resistant offspring of type 2 diabetic patients and insulin-sensitive control subjects underwent ¹³C MRS studies to noninvasively assess rates of substrate oxidation in muscle by monitoring the incorporation of ¹³C label into C₄ glutamate during a [2-¹³C]acetate infusion. Using this approach, we found that rates of muscle mitochondrial substrate oxidation were decreased by 30% in lean, insulin-resistant offspring (59.8 ± 5.1 nmol · g⁻¹ · min⁻¹, P = 0.02) compared with insulin-sensitive control subjects (96.1 ± 16.3 nmol · g⁻¹ · min⁻¹). These data support the hypothesis that insulin resistance in skeletal muscle of insulin-resistant offspring is associated with dysregulation of intramyocellular fatty acid metabolism, possibly because of an inherited defect in the activity of mitochondrial oxidative phosphorylation.