The prevalence of insulin resistance and type 2 diabetes mellitus (T2DM) in obese children and adolescents is growing at an alarming rate, especially in ethnic minorities. It is not clear whether young people of different ethnic backgrounds vary in their metabolic response to excessive adiposity. Differences in lipid partitioning in the abdominal fat compartments have been observed among different ethnic groups. The aim of this study was to evaluate whether there are ethnic differences in intramyocellular lipid (IMCL) levels that are related to differences in insulin sensitivity. Eighty-two obese children and adolescents underwent 1) 1H nuclear magnetic resonance (NMR) spectroscopy to non-invasively quantify IMCL levels in their soleus muscle, 2) an oral glucose tolerance test and (in a subset of subjects) a euglycemic-hyperinsulinemic clamp to assess insulin sensitivity, 3) a dual-energy X-ray absorptiometry (DEXA) scan to measure total percent body fat, and 4) magnetic resonance imaging to measure abdominal fat distribution. IMCL levels in Hispanic children and adolescents (1.50 ± 0.64%) were significantly greater than in their Caucasian (1.19 ± 0.40%) and African-American (1.09 ± 0.49%) peers. Visceral fat was significantly lower in African Americans (42.7 ± 18.8cm2) and were similar in Caucasians (70.9 ± 27.5cm2) and Hispanics (77.3 ± 41.9cm2). The three groups were not different with respect to insulin sensitivity. For the entire cohort, IMCL levels were inversely related to insulin sensitivity. There was a significant correlation between visceral fat and insulin resistance in Hispanics and Caucasians but not in African Americans. In conclusion, these data suggest that there are significant ethnic differences in lipid partitioning in both the muscle and abdominal compartment. These findings may explain ethnic differences in insulin sensitivity and further the understanding of the pathogenesis of insulin resistance and T2DM.