Fatty acids, either derived from the diet or synthesized intracellularly, form the basis of a wide range of lipid molecules. In addition to the well-known roles of lipids as structural components of membranes and as high density energy stores, several classes of these molecules can act as mediators of signal transduction. Active lipid species can be generated acutely, such as the release of diacylglycerol (DAG) by phospholipid hydrolysis, which occurs upon receptor-mediated phospholipase C activation. DAG generation subsequently leads to the activation of isoforms of the protein kinase C (PKC) family, and the phosphorylation of a range of protein substrates, depending on the isoform and cell type involved. However, it has also become apparent that chronic accumulation of signalling lipids, such as DAG and the sphingolipid ceramide, can occur by de novo synthesis upon fatty acid oversupply. This contributes to several defects associated with obesity, especially the generation of insulin resistance, which in turn plays a major role in type 2 diabetes. The cellular location of lipid intermediates accumulating in the longer term may differ from that of mediators rapidly released upon receptor stimulation. For example, DAG molecules are synthesized from fatty acids at the endoplasmic reticulum before incorporation into lipid droplets, whereas they are acutely generated by phospholipid hydrolysis at the plasma membrane. PKC isoforms are therefore activated at different sites under these conditions and may phosphorylate distinct subsets of protein substrates. It is widely assumed that chronic PKC activation in muscle and liver contributes to insulin resistance by inhibitory crosstalk with proximal insulin signalling. Our recent work, however, has demonstrated roles for specific PKCs in the regulation of fatty acid metabolism itself, under different conditions such as lipid excess and starvation, implicating these kinases in the feedback regulation of lipid storage.