Studies have shown that high levels of serum free fatty acids (FFAs) are associated with lipotoxicity and type 2 diabetes. Palmitic acid (PA) is the predominant circulating saturated FFA, yet its role in the pathogenesis of diabetic nephropathy (DN) is not clear. Recently, one study suggested that mitochondrial superoxide production is related to AMP‐activated protein kinase (AMPK) activity in diabetic mice kidneys. To elucidate the link between PA and oxidative stress and AMPK activity in DN, we compared the cultured murine podocytes exposed to PA and oleic acid (OA). Incubation of cells with 250 μM PA or OA induced a translocation of CD36, a fatty acid transport protein, with intracellular lipid accumulation. PA, but not OA, induced mitochondrial superoxide and hydrogen peroxide (H₂O₂) generation in podocytes, as shown by enhanced fluorescence of MitoSOX Red and dichlorofluorescein (DCF), respectively. Costimulation of PA‐treated cells with the H₂O₂ scavenger catalase abolished the PA‐induced DCF fluorescence. Only PA induced mitochondrial damage as shown by electron microscopy. The AMPK activity was determined by immunoblotting, measuring the ratio of phosphorylated AMPK (p‐AMPK) to total AMPK. Only PA significantly increased the p‐AMPK levels compared with controls. Addition of catalase to PA‐treated cells did not affect the PA‐stimulated p‐AMPK levels. Collectively, our results indicate that PA induces mitochondrial superoxide and H₂O₂ generation in cultured podocytes, which may not be directly linked to AMPK activation. Given that, PA seems to play an important role in the pathogenesis of DN through lipotoxicity initiated by mitochondrial superoxide overproduction.