The objective of this study was to investigate the effects of 5-aminoimidazole-4-carboxamide-1--D-ribofuranoside (AICAR)-induced AMP-activated protein kinase (AMPK) activation on basal and insulin-stimulated glucose and fatty acid metabolism in isolated rat adipocytes. AICAR-induced AMPK activation profoundly inhibited basal and insulin-stimulated glucose uptake, lipogenesis, glucose oxidation, and lactate production in fat cells. We also describe the novel findings that AICAR-induced AMPK phosphorylation significantly reduced palmitate (32%) and oleate uptake (41%), which was followed by a 50% reduction in palmitate oxidation despite a marked increase in AMPK and acetyl-CoA carboxylase phosphorylation. Compound C, a selective inhibitor of AMPK, not only completely prevented the inhibitory effect of AICAR on palmitate oxidation but actually caused a 2.2-fold increase in this variable. Compound C also significantly increased palmitate oxidation in the presence of inhibitory concentrations of malonyl-CoA and etomoxir indicating an increase in CPT1 activity. In contrast to skeletal muscle in which AMPK stimulates fatty acid oxidation to provide ATP as a fuel, we propose that AMPK activation inhibits lipogenesis and fatty acid oxidation in adipocytes. Inhibition of lipogenesis would conserve ATP under conditions of cellular stress, although suppression of intra-adipocyte oxidation would spare fatty acids for exportation to other tissues where their utilization is crucial for energy production. Additionally, the stimulatory effect of compound C on long chain fatty acid oxidation provides a novel pharmacological approach to promote energy dissipation in adipocytes, which may be of therapeutic importance for obesity and type II diabetes.