Interest in the pathophysiological relevance of intramuscular triacylglycerol (IMTG) accumulation has grown from numerous studies reporting that abnormally high glycerolipid levels in tissues of obese and diabetic subjects correlate negatively with glucose tolerance. Here, we used a hindlimb perfusion model to examine the impact of obesity and elevated IMTG levels on contraction-induced changes in skeletal muscle fuel metabolism. Comprehensive lipid profiling was performed on gastrocnemius muscles harvested from lean and obese Zucker rats immediately and 25 min after 15 min of one-legged electrically stimulated contraction compared with the contralateral control (rested) limbs. Predictably, IMTG content was grossly elevated in control muscles from obese rats compared with their lean counterparts. In muscles of obese (but not lean) rats, contraction resulted in marked hydrolysis of IMTG, which was then restored to near resting levels during 25 min of recovery. Despite dramatic phenotypical differences in contraction-induced IMTG turnover, muscle levels of diacylglycerol (DAG) and long-chain acyl-CoAs (LCACoA) were surprisingly similar between groups. Tissue profiles of acylcarnitine metabolites suggested that the surfeit of IMTG in obese rats fueled higher rates of fat oxidation relative to the lean group. Muscles of the obese rats had reduced lactate levels immediately following contraction and higher glycogen resynthesis during recovery, consistent with a lipid-associated glucose-sparing effect. Together, these findings suggest that contraction-induced mobilization of local lipid reserves in obese muscles promotes beta-oxidation, while discouraging glucose utilization. Further studies are necessary to determine whether persistent oxidation of IMTG-derived fatty acids contributes to systemic glucose intolerance in other physiological settings.