The prevalence of type 2 diabetes is greater among African Americans (AA) vs. European Americans (EA), independent of obesity and lifestyle. We tested the hypothesis that intramyocellular lipid (IMCL) or extramycellular lipid (EMCL) would be associated with insulin sensitivity among healthy young women, and that the associations would differ with ethnic background. We also explored the hypothesis that adipokines and estradiol would be associated with muscle lipid content. Participants were 57 healthy, normoglycemic, women and girls mean age 26 (±10) years; mean BMI 27.3 (±4.8) kg/m2; 32AA, 25EA. Soleus IMCL and EMCL were assessed with 1 H magnetic resonance spectroscopy (MRS); insulin sensitivity with an insulin-modified frequently sampled intravenous glucose tolerance test and minimal modeling; body composition with dual-energy X-ray absorptiometry; and intra-abdominal adipose tissue (IAAT) with computed tomography. Adiponectin, leptin, and estradiol were assessed in fasting sera. Analyses indicated that EMCL, but not IMCL, was greater in AA vs. EA (2.55±0.16 vs. 1.98±0.18 arbitrary units, respectively, P<0.05; adjusted for total body fat). IMCL was associated with insulin sensitivity in EA (r = 0.54, P<0.05, adjusted for total fat, IAAT, and age), but not AA (r = 0.16, P = 0.424). IMCL was inversely associated with adiponectin (r = 0.31, P 0.05, adjusted for ethnicity, age, total fat, and IAAT). In conclusion, IMCL was a significant determinant of insulin sensitivity among healthy, young, EA but not AA women. Further research is needed to determine whether the component lipids of IMCL (e.g., diacylglycerol (DAG) or ceramide) are associated with insulin sensitivity in an ethnicity specific manner. © 2010 The Obesity Society.