Insulin resistance and type 2 diabetes have been associated with ectopic lipid deposition. This study investigates the derangements in postprandial lipid handling in liver and skeletal muscle tissue at different stages during the pathogenesis of type 2 diabetes in a rat model. Four groups (n = 6) of male Zucker diabetic fatty rats were used for this study: prediabetic fa/fa rats and healthy fa/+ littermates at the age of 6 weeks, and diabetic fa/fa rats and healthy fa/+ littermates at the age of 12 weeks. In vivo H-1-[C-13] magnetic resonance spectroscopy measurements were performed in liver and tibialis anterior muscle at baseline and 4, 24 and 48 h after oral administration of 1.5 g [U-C-13]algal lipid mixture per kilogram body weight. Total and C-13-labelled intracellular lipid contents were determined from the magnetic resonance spectra. In both prediabetic and diabetic rats, total lipid contents in muscle and liver were substantially higher than in healthy controls and this was accompanied by a 2.3-fold greater postprandial lipid uptake in the liver (p <0.001). Interestingly, in prediabetic rats, skeletal muscle appeared to be protected from excess lipid uptake whereas after developing overt diabetes muscle lipid uptake was 3.4-fold higher than in controls (p <0.05). Muscle lipid use was significantly lower in prediabetic and diabetic muscle, indicative of impairments in lipid oxidation. In vivo postprandial lipid handling is disturbed in both liver and skeletal muscle tissue in prediabetic and diabetic rats, but the uptake of dietary lipids in muscle is only increased after the development of overt diabetes.