Accumulating evidence from animal studies suggest that chronic elevation of circulating intestinal-generated lipopolysaccharide (LPS) (i.e., metabolic endotoxemia) could play a role in the pathogenesis of insulin resistance. However, the effect of LPS in human muscle is unclear. Moreover, it is unknown whether blockade/down regulation of toll-like receptor (TLR)4 can prevent the effect of LPS on insulin action and glucose metabolism in human muscle cells. In the present study we compared plasma LPS concentration in insulin resistant [obese non-diabetic and obese type 2 diabetic (T2DM)] subjects versus lean individuals. In addition, we employed a primary human skeletal muscle cell culture system to investigate the effect of LPS on glucose metabolism and whether these effects are mediated via TLR4. Obese non-diabetic and T2DM subjects had significantly elevated plasma LPS and LPS binding protein (LBP) concentrations. Plasma LPS (r = −0.46, P = 0.005) and LBP (r = −0.49, P = 0.005) concentrations negatively correlated with muscle insulin sensitivity (M). In human myotubes, LPS increased JNK phosphorylation and MCP-1 and IL-6 gene expression. This inflammatory response led to reduced insulin-stimulated IRS-1, Akt and AS160 phosphorylation and impaired glucose transport. Both pharmacologic blockade of TLR4 with TAK-242, and TLR4 gene silencing, suppressed the inflammatory response and insulin resistance caused by LPS in human muscle cells. Taken together, these findings suggest that elevations in plasma LPS concentration found in obese and T2DM subjects could play a role in the pathogenesis of insulin resistance and that antagonists of TLR4 may improve insulin action in these individuals.