Pro-inflammatory cytokines secreted by adipose tissue macrophages (ATMs) contribute to chronic low-grade inflammation and obesity-induced insulin resistance. Recent studies have shown that adipose tissue hypoxia promotes an inflammatory phenotype in ATMs. However, our understanding of how hypoxia modulates the response of ATMs to free fatty acids within obese adipose tissue is limited. We examined the effects of hypoxia (1% O2) on the pro-inflammatory responses of human monocyte-derived macrophages to the saturated fatty acid palmitate. Compared with normoxia, hypoxia significantly increased palmitate-induced mRNA expression and protein secretion of IL-6 and IL-1β. Although palmitate-induced endoplasmic reticulum stress and nuclear factor κB pathway activation were not enhanced by hypoxia, hypoxia increased the activation of JNK and p38 mitogen-activated protein kinase signaling in palmitate-treated cells. Inhibition of JNK blocked the hypoxic induction of pro-inflammatory cytokine expression, whereas knockdown of hypoxia-induced transcription factors HIF-1α and HIF-2α alone or in combination failed to reduce IL-6 and only modestly reduced IL-1β gene expression in palmitate-treated hypoxic macrophages. Enhanced pro-inflammatory cytokine production and JNK activity under hypoxia were prevented by inhibiting reactive oxygen species generation. In addition, silencing of dual-specificity phosphatase 16 increased normoxic levels of IL-6 and IL-1β and reduced the hypoxic potentiation in palmitate-treated macrophages. The secretome of hypoxic palmitate-treated macrophages promoted IL-6 and macrophage chemoattractant protein 1 expression in primary human adipocytes, which was sensitive to macrophage JNK inhibition. Our results reveal that the coexistence of hypoxia along with free fatty acids exacerbates macrophage-mediated inflammation.