Our previous study demonstrated that the Korean traditional medicine Gyeongshingangjeehwan (GGEx) activates AMP-activated protein kinase (AMPK) and peroxisome proliferator-activated receptor ${alpha}$ ($PPAR{alpha}$) critical for fatty acid oxidation in skeletal muscle and C2C12 skeletal muscle cells. Thus, we examined whether GGEx can reduce lipid accumulation in these cells and tissues. After obese and type 2 diabetic Otsuka Long-Evans Tokushima Fatty (OLETF) rats were treated with GGEx, we studied the effects of GGEx on skeletal muscle lipid accumulation. The effects of GGEx and/or the AMPK inhibitor compound C on lipid accumulation and expression of AMPK and $PPAR{alpha}$ were measured in C2C12 skeletal muscle cells. Compared with lean Long-Evans Tokushima Otsuka rats, obese OLETF rats had increased triglyceride droplets. However, administration of GGEx to OLETF rats for 8 weeks significantly decreased triglyceride droplets in skeletal muscle. Consistent with the $in$ $vivo$ data, GGEx inhibited lipid accumulation, the degree of which was comparable to Wy14,643, the potent activator of $PPAR{alpha}$. GGEx also increased skeletal muscle mRNA levels of AMPK${alpha}1$, AMPK${alpha}2$, and $PPAR{alpha}$. However, compound C inhibited these effects in C2C12 cells. These results suggest that GGEx suppresses skeletal muscle lipid accumulation and this process may be mediated by AMPK and $PPAR{alpha}$ activation.