Gestational diabetes mellitus (GDM) is associated with elevated postprandial free fatty acids (FFA) and insulin resistance; however, little is known about the cellular mechanisms underlying insulin resistance to suppress lipolysis during gestation. We evaluated the longitudinal changes in insulin suppression of FFA before pregnancy and in early (12-14 wk) and late (34-36 wk) gestation in obese subjects with normal glucose tolerance and in obese GDM subjects. Abdominal subcutaneous adipose tissue biopsies were also obtained during cesarean delivery from normal obese pregnant (Preg-Con), GDM, and nonpregnant obese control (Non-Preg-Con) subjects during gynecological surgery. GDM subjects had higher basal plasma FFA before pregnancy (P = 0.055). Insulin's ability to suppress FFA levels declined from early to late gestation in both GDM and Preg-Con subjects and was significantly less in GDM subjects compared with Preg-Con subjects over time (P = 0.025). Adipose tissue insulin receptor substrate (IRS)-1 protein levels were 43% lower (P = 0.02) and p85alpha subunit of phosphatidylinositol 3-kinase was twofold higher (P = 0.03) in GDM compared with Preg-Con subjects. The levels of peroxisome proliferator-activated receptor-gamma (PPARgamma) mRNA and protein were lower by 38% in Preg-Con (P = 0.006) and by 48% in GDM subjects (P = 0.005) compared with Non-Preg controls. Lipoprotein lipase and fatty acid-binding protein-2 mRNA levels were 73 and 52% lower in GDM compared with Preg-Con subjects (P < 0.002). Thus GDM women have decreased IRS-1, which may contribute to reduced insulin suppression of lipolysis with advancing gestation. Decreased PPARgamma and its target genes may be part of the molecular mechanism to accelerate fat catabolism to meet fetal nutrient demand in late gestation.