Dysregulated lipid metabolism and inflammation are linked to the development of insulin resistance in obesity, and the intracellular accumulation of the sphingolipid ceramide has been implicated in these processes. Here, we explored the role of circulating ceramide on the pathogenesis of insulin resistance. Ceramide transported in LDL is elevated in the plasma of obese patients with type 2 diabetes and correlated with insulin resistance but not with the degree of obesity. Treating cultured myotubes with LDL containing ceramide promoted ceramide accrual in cells and was accompanied by reduced insulin-stimulated glucose uptake, Akt phosphorylation, and GLUT4 translocation compared with LDL deficient in ceramide. LDL-ceramide induced a proinflammatory response in cultured macrophages via toll-like receptor-dependent and -independent mechanisms. Finally, infusing LDL-ceramide into lean mice reduced insulin-stimulated glucose uptake, and this was due to impaired insulin action specifically in skeletal muscle. These newly identified roles of LDL-ceramide suggest that strategies aimed at reducing hepatic ceramide production or reducing ceramide packaging into lipoproteins may improve skeletal muscle insulin action.