The purpose of the study was to investigate the effect of aerobic training and type 2 diabetes on intramyocellular localization of lipids, mitochondria, and glycogen. Obese type 2 diabetic patients (n = 12) and matched obese controls (n = 12) participated in aerobic cycling training for 10 wk. Endurance-trained athletes (n = 15) were included for comparison. Insulin action was determined by euglycemic-hyperinsulinemic clamp. Intramyocellular contents of lipids, mitochondria, and glycogen at different subcellular compartments were assessed by transmission electron microscopy in biopsies obtained from vastus lateralis muscle. Type 2 diabetic patients were more insulin resistant than obese controls and had threefold higher volume of subsarcolemmal (SS) lipids compared with obese controls and endurance-trained subjects. No difference was found in intermyofibrillar lipids. Importantly, following aerobic training, this excess SS lipid volume was lowered by approximately 50%, approaching the levels observed in the nondiabetic subjects. A strong inverse association between insulin sensitivity and SS lipid volume was found (r(2)=0.62, P = 0.002). The volume density and localization of mitochondria and glycogen were the same in type 2 diabetic patients and control subjects, and showed in parallel with improved insulin sensitivity a similar increase in response to training, however, with a more pronounced increase in SS mitochondria and SS glycogen than in other localizations. In conclusion, this study, estimating intramyocellular localization of lipids, mitochondria, and glycogen, indicates that type 2 diabetic patients may be exposed to increased levels of SS lipids. Thus consideration of cell compartmentation may advance the understanding of the role of lipids in muscle function and type 2 diabetes.