Aims/Hypothesis: Reduced skeletal muscle insulin sensitivity is a feature associated with sustained exposure to excess saturated fatty acids (SFA), whereas mono and polyunsaturated fatty acids (MUFA and PUFA) not only improve insulin sensitivity but blunt SFA-induced insulin resistance. The mechanisms by which MUFAs and PUFAs institute these favourable changes remain unclear, but may involve stimulating insulin signalling by counter-modulation/repression of protein phosphatase 2A (PP2A). This study investigated the effects of oleic acid (OA; a MUFA), linoleic acid (LOA; a PUFA) and palmitate (PA; a SFA) in cultured myotubes and determined whether changes in insulin signalling can be attributed to PP2A regulation. Principal Findings: We treated cultured skeletal myotubes with unsaturated and saturated fatty acids and evaluated insulin signalling, phosphorylation and methylation status of the catalytic subunit of PP2A. Unlike PA, sustained incubation of rat or human myotubes with OA or LOA significantly enhanced Akt-and ERK1/2-directed insulin signalling. This was not due to heightened upstream IRS1 or PI3K signalling nor to changes in expression of proteins involved in proximal insulin signalling, but was associated with reduced dephosphorylation/inactivation of Akt and ERK1/2. Consistent with this, PA reduced PP2Ac demethylation and tyrosine 307 phosphorylation-events associated with PP2A activation. In contrast, OA and LOA strongly opposed these PA-induced changes in PP2Ac thus exerting a repressive effect on PP2A. Conclusions/Interpretation: Beneficial gains in insulin sensitivity and the ability of unsaturated fatty acids to oppose palmitate-induced insulin resistance in muscle cells may partly be accounted for by counter-modulation of PP2A.