We hypothesized that acute lipid-induced insulin resistance would be attenuated in high-oxidative muscle of lean trained (LT) endurance athletes due to their enhanced metabolic flexibility and mitochondrial capacity. Lean sedentary (LS), obese sedentary (OS), and LT participants completed two hyperinsulinemic euglycemic clamp studies with and without (glycerol control) the coinfusion of Intralipid. Metabolic flexibility was measured by indirect calorimetry as the oxidation of fatty acids and glucose during fasted and insulin-stimulated conditions, the latter with and without lipid oversupply. Muscle biopsies were obtained for mitochondrial and insulin-signaling studies. During hyperinsulinemia without lipid, glucose infusion rate (GIR) was lowest in OS due to lower rates of nonoxidative glucose disposal (NOGD), whereas state 4 respiration was increased in all groups. Lipid infusion reduced GIR similarly in all subjects and reduced state 4 respiration. However, in LT subjects, fat oxidation was higher with lipid oversupply, and although glucose oxidation was reduced, NOGD was better preserved compared with LS and OS subjects. Mitochondrial performance was positively associated with better NOGD and insulin sensitivity in both conditions. We conclude that enhanced mitochondrial performance with exercise is related to better metabolic flexibility and insulin sensitivity in response to lipid overload.