Elevated plasma statured fatty acids (FFAs) cause TLR4/MD2 activation-dependent inflammation and insulin tolerance, which account for the occurrence and development of obesity. It has been confirmed that statured palmitic acid (PA) (the most abundant FFA) could bind MD2 to cause cellular inflammation. The natural compound celastrol could improve obesity, which is suggested via inhibiting inflammation, yet the detailed mechanism for celastrol is still unclear. As celastrol is reported to directly target MD2, we thought disrupting the binding between FFAs and MD2 might be one of the ways for celastrol to inhibit FFAs-caused inflammation and insulin resistance. In this study, we found evidence to support our hypothesis: celastrol could reverse PA-caused TLR4/MD2 activation-dependent insulin resistance, as determined by glucose-lowering ability, cellular glucose uptake, insulin action-related proteins and TLR4/MD2/NF-κB activation. Bioinformatics and cellular experiments showed that both celastrol and PA could bind MD2, and that celastrol could expel PA from cells. Finally, celastrol could reverse high fat diet caused hyperglycemia and obesity, and liver NF-kB activations. Taking together, we proved that celastrol could reverses PA-caused TLR4-MD2 activation-dependent insulin resistance via disrupting PA binding to MD2.