A body of literature supports the postulation that a persistent lipid metabolic imbalance causes lipotoxicity, “an abnormal fat storage in the peripheral organs”. Hence, lipotoxicity could somewhat explain the process of sarcopenia, an aging-related, gradual, and involuntary decline in skeletal muscle strength and mass associated with several health complications. This review focuses on the recent mechanisms underlying lipotoxicity-related sarcopenia. A vicious cycle occurs between sarcopenia and ectopic fat storage via a complex interplay of mitochondrial dysfunction, pro-inflammatory cytokine production, oxidative stress, collagen deposition, extracellular matrix remodeling, and life habits. The repercussions of lipotoxicity exacerbation of sarcopenia can include increased disability, morbidity, and mortality. This suggests that appropriate lipotoxicity management should be considered the primary target for the prevention and/or treatment of chronic musculoskeletal and other aging-related disorders. Further advanced research is needed to understand the molecular details of lipotoxicity and its consequences for sarcopenia and sarcopenia-related comorbidities.