Patients taking atypical antipsychotics are frequented by serious metabolic (eg, hyperglycemia, obesity, and diabetes) and cardiac effects. Surprisingly, chronic treatment also appears to lower free fatty acids (FFAs). This finding is paradoxical because insulin resistance is typically associated with elevated not lower FFAs. How atypical antipsychotics bring about these converse changes in plasma glucose and FFAs is unknown. Chronic treatment with olanzapine, a prototypical, side effect prone atypical antipsychotic, lowered FFA in Sprague-Dawley rats. Olanzapine also lowered plasma FFA acutely, concomitantly impairing in vivo lipolysis and robustly elevating whole-body lipid oxidation. Increased lipid oxidation was evident from accelerated losses of triglycerides after food deprivation or lipid challenge, elevated FFA uptake into most peripheral tissues (∼2-fold) except heart, rises in long-chain 3-hydroxylated acyl-carnitines observed in diabetes, and rapid suppression of the respiratory exchange ratio (RER) during the dark cycle. Normal rises in RER following refeeding, a sign of metabolic flexibility, were severely blunted by olanzapine. Increased lipid oxidation in muscle could be explained by ∼50% lower concentrations of the negative cytoplasmic regulator of carnitine palmitoyltransferase I, malonyl-CoA. This was associated with loss of anapleurotic metabolites and citric acid cycle precursors of malonyl-CoA synthesis rather than adenosine monophosphate-activated kinase activation or direct ACC1/2 inhibition. The ability of antipsychotics to lower dark cycle RER in mice corresponded to their propensities to cause metabolic side effects. Our studies indicate that lipocentric mechanisms or altered intermediary metabolism could underlie the FFA lowering and hyperglycemia (Randle cycle) as well as some of the other side effects of atypical antipsychotics, thereby suggesting strategies for alleviating them.