The dose-response relationship between elevated plasma free fatty acid (FFA) levels and impaired insulin-mediated glucose disposal and insulin signaling was examined in 21 lean, healthy, normal glucose-tolerant subjects. Following a 4-h saline or Liposyn infusion at 30 (n = 9), 60 (n = 6), and 90 (n = 6) ml/h, subjects received a 2-h euglycemic insulin (40 mU · m⁻² · min⁻¹) clamp. Basal plasma FFA concentration (∼440 μmol/l) was increased to 695, 1,251, and 1,688 μmol/l after 4 h of Liposyn infusion and resulted in a dose-dependent reduction in insulin-stimulated glucose disposal (R_d) by 22, 30, and 34%, respectively (all P < 0.05 vs. saline control). At the lowest lipid infusion rate (30 ml/h), insulin receptor and insulin receptor substrate (IRS)-1 tyrosine phosphorylation, phosphatidylinositol (PI) 3-kinase activity associated with IRS-1, and Akt serine phosphorylation were all significantly impaired (P < 0.05–0.01). The highest lipid infusion rate (90 ml/h) caused a further significant reduction in all insulin signaling events compared with the low-dose lipid infusion (P < 0.05–0.01) whereas the 60-ml/h lipid infusion caused an intermediate reduction in insulin signaling. However, about two-thirds of the maximal inhibition of insulin-stimulated glucose disposal already occurred at the rather modest increase in plasma FFA induced by the low-dose (30-ml/h) lipid infusion. Insulin-stimulated glucose disposal was inversely correlated with both the plasma FFA concentration after 4 h of lipid infusion (r = −0.50, P = 0.001) and the plasma FFA level during the last 30 min of the insulin clamp (r = −0.54, P < 0.001). PI 3-kinase activity associated with IRS-1 correlated with insulin-stimulated glucose disposal (r = 0.45, P < 0.01) and inversely with both the plasma FFA concentration after 4 h of lipid infusion (r = −0.39, P = 0.01) and during the last 30 min of the insulin clamp (r = −0.43, P < 0.01). In summary, in skeletal muscle of lean, healthy subjects, a progressive increase in plasma FFA causes a dose-dependent inhibition of insulin-stimulated glucose disposal and insulin signaling. The inhibitory effect of plasma FFA was already significant following a rather modest increase in plasma FFA and develops at concentrations that are well within the physiological range (i.e., at plasma FFA levels observed in obesity and type 2 diabetes).