Lipid overload in obesity and type 2 diabetes is associated with adipocyte dysfunction, inflammation, macrophage infiltration, and decreased fatty acid oxidation (FAO). Here, we report that the expression of carnitine palmitoyltransferase 1A (CPT1A), the rate-limiting enzyme in mitochondrial FAO, is higher in human adipose tissue macrophages than in adipocytes and that it is differentially expressed in visceral vs. subcutaneous adipose tissue in both an obese and a type 2 diabetes cohort. These observations led us to further investigate the potential role of CPT1A in adipocytes and macrophages. We expressed CPT1AM, a permanently active mutant form of CPT1A, in 3T3-L1 CARΔ1 adipocytes and RAW 264.7 macrophages through adenoviral infection. Enhanced FAO in palmitate-incubated adipocytes and macrophages reduced triglyceride content and inflammation, improved insulin sensitivity in adipocytes, and reduced endoplasmic reticulum stress and ROS damage in macrophages. We conclude that increasing FAO in adipocytes and macrophages improves palmitate-induced derangements. This indicates that enhancing FAO in metabolically relevant cells such as adipocytes and macrophages may be a promising strategy for the treatment of chronic inflammatory pathologies such as obesity and type 2 diabetes.