Aims/hypothesis Enhanced plasma levels of NEFA have been shown to induce hepatic insulin resistance, which contributes to the development of type 2 diabetes. Indeed, sphingolipids can be formed via a de novo pathway from the saturated fatty acid palmitate and the amino acid serine. Besides ceramides, sphingosine 1-phosphate (S1P) has been identified as a major bioactive lipid mediator. Therefore, our aim was to investigate the generation and function of S1P in hepatic insulin resistance. Methods The incorporation of palmitate into sphingolipids was performed by rapid-resolution liquid chromatography-MS/MS in primary human and rat hepatocytes. The influence of S1P and the involvement of S1P receptors in hepatic insulin resistance was examined in human and rat hepatocytes, as well as in New Zealand obese (NZO) mice. Results Palmitate induced an impressive formation of extraand intracellular S1P in rat and human hepatocytes. An elevation of hepatic S1P levels was observed in NZO mice fed a high-fat diet. Once generated, S1P was able, similarly to palmitate, to counteract insulin signalling. The inhibitory effect of S1P was abolished in the presence of the S1P 2 receptor antagonist JTE-013 both in vitro and in vivo. In agreement with this, the immunomodulator FTY720-phosphate, which binds to all S1P receptors except S1P 2 , was not able to inhibit insulin signalling. Conclusions/interpretation These data indicate that palmitate is metabolised by hepatocytes to S1P, which acts via stimulation of the S1P 2 receptor to impair insulin signalling. In particular, S1P 2 inhibition could be considered as a novel therapeutic target for the treatment of insulin resistance.