Ceramides have been shown to play a major role in the onset of skeletal muscle insulin resistance and therefore in the prevalence of type 2 diabetes. However, many of the studies involved in the discovery of deleterious ceramide actions used a nonphysiological, cell-permeable, short-chain ceramide analog, the C2-ceramide (C2-cer). In the present study, we determined how C2-cer promotes insulin resistance in muscle cells. We demonstrate that C2-cer enters the salvage/recycling pathway and becomes deacylated, yielding sphingosine, re-acylation of which depends on the availability of long chain fatty acids provided by the lipogenesis pathway in muscle cells. Importantly, we show these salvaged ceramides are actually responsible for the inhibition of insulin signaling induced by C2-cer. Interestingly, we also show that the exogenous and endogenous monounsaturated fatty acid oleate prevents C2-cer to be recycled into endogenous ceramide species in a diacylglycerol O-acyltransferase 1-dependent mechanism, which forces free fatty acid metabolism towards triacylglyceride production. Altogether, the study highlights for the first time that C2-cer induces a loss in insulin sensitivity through the salvage/recycling pathway in muscle cells. This study also validates C2-cer as a convenient tool to decipher mechanisms by which long-chain ceramides mediate insulin resistance in muscle cells and suggests that in addition to the de novo ceramide synthesis, recycling of ceramide could contribute to muscle insulin resistance observed in obesity and type 2 diabetes.