In obese and diabetic patients, plasma free fatty acid (FFA) levels are often elevated and may play a causal role in insulin resistance and reactive oxygen species (ROS) production. We have previously shown that ursodeoxycholic acid (UDCA) has antioxidative activity through the phosphatidylinositol 3-kinase (PI3K)/Akt signaling-mediated glutathione production. In this study, we investigated the effects of UDCA on insulin response by analyzing intracellular ROS and the activation of the PI3K/Akt signaling pathway in HepG2 cells treated with palmitate. The level of ROS was quantified using 2′,7′-dichlorodihydrofluorescein diacetate (H₂DCFDA), and the activation of the PI3K/Akt signaling pathway was determined by Western blotting assay using appropriate antibodies. The intracellular ROS levels were increased by palmitate but were reduced by treatment with UDCA and insulin. Furthermore, insulin significantly stimulated the phosphorylation of Akt. When the cells were pre-treated with palmitate, insulin-induced Akt-phosphorylation was markedly inhibited. However, when the cells were treated with palmitate and UDCA, the effects of insulin were partially restored. UDCA may have protective effects against palmitate-induced decreases in responsiveness to insulin.