Insulin resistance is associated with ectopic lipid accumulation. Physical activity improves insulin sensitivity, but the impact of exercise on lipid handling in insulin-resistant tissues remains to be elucidated. The present study characterizes the effects of acute exercise on lipid content and dietary lipid partitioning in liver and skeletal muscle of lean and diabetic rats using magnetic resonance spectroscopy (MRS). After baseline measurements, rats were randomized to exercise or no-exercise groups. A subset of animals was subjected to MRS directly after 1 h of treadmill running for measurement of total intrahepatocellular lipid (IHCL) and intramyocellular lipid (IMCL) content (n=7 lean and diabetic rats). The other animals were administered ¹³C-labeled lipids orally after treadmill visit (with or without exercise), followed by MRS measurements after 4 and 24 h to determine the ¹³C enrichment of IHCL and IMCL (n=8 per group). Total IHCL and IMCL content were 5-fold higher in diabetic versus lean rats (P<0.001). Exercise did not significantly affect IHCL content, but reduced IMCL by 25±7% and 33±4% in lean and diabetic rats (P<0.05), respectively. The uptake of dietary lipids in liver and muscle was 2.3-fold greater in diabetic versus lean rats (P<0.05). Prior exercise did not significantly modulate dietary lipid uptake into muscle, but in liver of both lean and diabetic rats, lipid uptake was 44% reduced after acute exercise (P<0.05). In conclusion, IMCL but not IHCL represents a viable substrate source during exercise in both lean and diabetic rats and exercise differentially affects dietary lipid uptake in muscle and liver.