We hypothesized that supplementing finishing diets with palm oil would promote adipocyte differentiation in subcutaneous adipose tissue of feedlot steers, and that soybean oil supplementation would depress adipocyte differentiation. Twenty-eight Angus steers were assigned randomly to 3 groups of 9 or 10 steers and fed a basal diet without additional fat (control), with 3% palm oil (rich in palmitic acid), or with 3% soybean oil (rich in polyunsaturated fatty acids), for 10 wk, top-dressed daily. Palm oil had no effect (P > 0.05) on ADG, food intake, or G:F, whereas soybean oil depressed ADG (P = 0.02), food intake (P = 0.04), and G:F (P = 0.05). Marbling scores tended (P = 0.09) to be greater in palm oil-fed steers (Modest(09)) than in soybean oil-fed steers (Small(55)). Subcutaneous adipocyte mean volume was greater in palm oil-fed steers (515.9 pL) than in soybean-supplemented cattle (395.6 pL; P = 0.01). Similarly, glucose and acetate incorporation into total lipids in vitro was greater in subcutaneous adipose tissue of palm oil-fed steers (119.9 and 242.8 nmol·3h(-1)·10(5) cells, respectively) than adipose tissue of soybean oil-fed steers in (48.9 and 95.8 nmol·3h(-1)·10(5) cells, respectively). Glucose-6-phosphate dehydrogenase and NADP-malate dehydrogenase activities were greater (P ≤ 0.05) in subcutaneous adipose tissue of palm oil-fed steers than in adipose tissue of control steers. Palm oil did not increase palmitic acid or decrease oleic acid in subcutaneous adipose tissue or LM, but decreased (P ≤ 0.05) myristoleic, palmitoleic, and cis-vaccenic acid in adipose tissue, indicating a depression in stearoyl-coenzyme A desaturase activity. Soybean oil increased the proportion of α-linolenic acid in adipose tissue and muscle and increased linoleic acid and 18:1trans-10 in muscle. We conclude that palm oil supplementation promoted lipid synthesis in adipose tissue without depressing feed efficiency or increasing the palmitic acid content of beef.