An early insulin regimen ameliorates glucotoxicity but also lipotoxicity in type?2 diabetes; however, the underlying mechanism remains elusive. In the present study, we investigated the role of mitochondria in lipid regulation following early insulin administration in insulin-resistant skeletal muscle cells. Male C57BL/6 mice, fed a high-fat diet (HFD) for 8 weeks, were treated with insulin for 3?weeks, and L6 myotubes cultured with palmitate (PA) for 24?h were incubated with insulin for another 12 h. The results showed that insulin facilitated systemic glucose disposal and attenuated muscular triglyceride accumulation in?vivo. Recovery of AMP-activated protein kinase?(AMPK) phosphorylation, inhibition of sterol-regulated element binding protein-1c (SREBP-1c) and increased carnitine palmitoyltransferase?1B (CPT1B) expression were observed after insulin administration. Moreover, increased ATP concentration and cellular energy charge elicited by over-nutrition were suppressed by insulin. Despite maintaining respiratory complex activities, insulin restored muscular uncoupling protein?3 (UCP3) protein expression in?vitro and in?vivo. By contrast, knockdown of UCP3 abrogated insulin-induced restoration of AMPK phosphorylation in?vitro. Importantly, the PA-induced decrease in UCP3 was blocked by the proteasome inhibitor MG132, and insulin reduced UCP3 ubiquitination, thereby prohibiting its degradation. Our findings, focusing on energy balance, provide a mechanistic understanding of the promising effect of early insulin initiation on lipotoxicity. Insulin, by recovering UCP3 activity, alleviated energy surfeit and potentiated AMPK-mediated lipid homeostasis in skeletal muscle cells following exposure to PA and in gastrocnemius of mice fed HFD.