Obesity and aging are characterized by decreased insulin sensitivity (IS) and muscle protein synthesis. Intramuscular ceramide accumulation has been implicated in insulin resistance during obesity. We aimed to measure IS, muscle ceramide level, protein synthesis, and activation of intracellular signaling pathways involved in translation initiation in male Wistar young (YR, 6-month) and old (OR, 25-month) rats receiving a low- (LFD) or a high-fat diet (HFD) for 10 weeks. A corresponding cellular approach using C2C12 myotubes treated with palmitate to induce intracellular ceramide deposition was taken. A decreased ability of adipose tissue to store lipids together with a reduced adipocyte diameter and a development of fibrosis were observed in OR after the HFD. Consequently, OR fed the HFD were insulin resistant, showed a strong increase in intramuscular ceramide level and a decrease in muscle protein synthesis associated with increased eIF2alpha phosphorylation. The accumulation of intramuscular lipids placed a lipid burden on mitochondria and created a disconnect between metabolic and regulating pathways in skeletal muscles of OR. In C2C12 cells, palmitate-induced ceramide accumulation was associated with a decreased protein synthesis together with upregulated eIF2alpha phosphorylation. In conclusion, a reduced ability to expand adipose tissues was found in OR, reflecting a lower lipid buffering capacity. Muscle mitochondrial activity was affected in OR conferring a reduced ability to oxidize fatty acids entering the muscle cell. Hence, OR were more prone to ectopic muscle lipid accumulation than YR, leading to decreased muscle protein anabolism. This metabolic change is a potential therapeutic target to counter sarcopenic obesity.