Epigenetic modification through DNA methylation is implicated in metabolic disease. Using whole-genome promoter methylation analysis of skeletal muscle from normal glucose-tolerant and type 2 diabetic subjects, we identified cytosine hypermethylation of peroxisome proliferator-activated receptor γ (PPARγ) coactivator-1 α (PGC-1α) in diabetic subjects. Methylation levels were negatively correlated with PGC-1α mRNA and mitochondrial DNA (mtDNA). Bisulfite sequencing revealed that the highest proportion of cytosine methylation within PGC-1α was found within non-CpG nucleotides. Non-CpG methylation was acutely increased in human myotubes by exposure to tumor necrosis factor-α (TNF-α) or free fatty acids, but not insulin or glucose. Selective silencing of the DNA methyltransferase 3B (DNMT3B), but not DNMT1 or DNMT3A, prevented palmitate-induced non-CpG methylation of PGC-1α and decreased mtDNA and PGC-1α mRNA. We provide evidence for PGC-1α hypermethylation, concomitant with reduced mitochondrial content in type 2 diabetic patients, and link DNMT3B to the acute fatty-acid-induced non-CpG methylation of PGC-1α promoter.