To examine the mechanism by which fish oil protects against fat-induced insulin resistance, we studied the effects of control, fish oil, and safflower oil diets on peroxisomal content, fatty acyl-CoA, diacylglycerol, and ceramide content in rat liver and muscle. We found that, in contrast to control and safflower oil-fed rats, fish oil feeding induced a 150% increase in the abundance of peroxisomal acyl-CoA oxidase and 3-ketoacyl-CoA thiolase in liver but lacked similar effects in muscle. This was paralleled by an almost twofold increase in hepatic peroxisome content (both P < 0.002 vs. control and safflower). These changes in the fish oil-fed rats were associated with a more than twofold lower hepatic triglyceride/diacylglycerol, as well as intramuscular triglyceride/fatty acyl-CoA, content. In conclusion, these data strongly support the hypothesis that n-3 fatty acids protect against fat-induced insulin resistance by serving as peroxisome proliferator-activated receptor-alpha ligands and thereby induce hepatic, but not intramuscular, peroxisome proliferation. In turn, an increased hepatic beta-oxidative capacity results in lower hepatic triglyceride/diacylglycerol and intramyocellular triglyceride/fatty acyl-CoA content.