We previously showed that ethnicity modifies the association between adiposity and insulin resistance. We sought to determine whether differential body fat partitioning or abnormalities in muscle insulin signaling associated with higher levels of adiposity might underlie this observation. We measured the insulin sensitivity index (ISI), percentage of body fat (%body fat), visceral (VAT) and subcutaneous (SAT) adipose tissue, liver fat, and intramyocellular lipids (IMCL) in 101 Chinese, 82 Malays, and 81 South Asians, as well as phosphorylated (p)-Akt levels in cultured myoblasts from Chinese and South Asians. Lean Chinese and Malays had higher ISI than South Asians. Although the ISI was lower in all ethnic groups when %body fat was higher, this association was stronger in Chinese and Malays, such that no ethnic differences were observed in overweight individuals. These ethnic differences were observed even when %body fat was replaced with fat in other depots. Myoblasts obtained from lean South Asians had lower p-Akt levels than those from lean Chinese. Higher adiposity was associated with lower p-Akt levels in Chinese but not in South Asians, and no ethnic differences were observed in overweight individuals. With higher %body fat, Chinese exhibited smaller increases in deep SAT and IMCL compared with Malays and South Asians, which did not explain the ethnic differences observed. Our study suggests that body fat partitioning does not explain interethnic differences in insulin sensitivity among Asian ethnic groups. Although higher adiposity had greater effect on skeletal muscle insulin sensitivity among Chinese, obesity-independent pathways may be more relevant in South Asians.