We evaluated the effects of feeding a C16:0 supplement (85% C16:0) on markers of adipose tissue (AT) lipolysis and inflammation in early lactation dairy cows. Sixteen multiparous cows were used in a randomized complete block design experiment and assigned to either a control diet containing no supplemental fat (CON) or a C16:0 supplemented diet (PA; 1.5% diet DM) that was fed from calving to 24 DIM. Subcutaneous AT were collected at d −14 and d 10 of the study. Gene expression was assessed by qPCR and flow cytometry was used to determine AT immune cell trafficking and phenotype. The statistical model included the random effect of block, the fixed effect of treatment, and variables measured at d −14 as covariate. Compared with CON, PA increased the expression of genes related to lipolysis including LIPE (P = 0.03), ABHD5 (P < 0.01), and FABP4 (P = 0.05). We measured by Western blot the activity of hormone-sensitive lipase (HSL) and observed that compared with CON, PA increased the ratio of pHSL/HSL (P = 0.06) indicating enhanced lipolysis. There was no effect of treatment on the expression of genes related to lipogenesis including FASN, SCD1, and ELOVL6 (all P > 0.46), but compared with CON, PA reduced the expression of ADIPOQ (P = 0.05). Compared with CON, PA increased the expression of genes related to inflammation including TNF (P < 0.01), SIRPA (P = 0.05), and IL6 (P = 0.07), but did not affect CCL22 (P = 0.54) or IL10 (P = 0.84). Compared with CON, PA increased the expression of CCL2 (P < 0.01) that encodes the macrophage chemoattracting protein-1 and increased the expression of CD44 (P = 0.02), a macrophage receptor. The increase in lipolysis gene expression (LIPE) was correlated with BW loss (r = 0.44, P = 0.05), milk yield (r = 0.50, P = 0.01), and ECM (r = 0.58, P < 0.01). Flow cytometry revealed that compared with CON, PA increased AT macrophage trafficking as reflected in the increased number of CD172a⁺ (P = 0.05) and CD14⁺ (P = 0.09) cells. Our results demonstrate that feeding C16:0 during early lactation increased lipolysis to support the yield of milk and ECM and may increase inflammation in adipose tissue.