As obese and overweight patients commonly display hyperlipidemia and are increasingly accessing fertility clinics for their conception needs, our studies are directed at understanding the effects of hyperlipidemia on early pregnancy. We have focused on investigating palmitic acid (PA) and oleic acid (OA) treatment alone and in combination from the mouse two-cell stage embryos as a model for understanding their effects on the mammalian preimplantation embryo. We recently reported that PA exerts a negative effect on mouse two-cell progression to the blastocyst stage, whereas OA co-treatment reverses that negative effect. In the present study, we hypothesized that PA treatment of mouse embryos would disrupt proper localization of cell fate determining and blastocyst formation gene products and that co-treatment with OA would reverse these effects. Our results demonstrate that PA treatment significantly (P < 0.05) reduces blastocyst development and cell number but did not prevent nuclear localization of YAP in outer cells. PA treatment significantly reduced the number of OCT4+ and CDX2+ nuclei. PA-treated embryos had lower expression of blastocyst formation proteins (E-cadherin, ZO-1 and Na/K-ATPase alpha1 subunit). Importantly, co-treatment of embryos with OA reversed PA-induced effects on blastocyst development and increased inner cell mass (ICM) and trophectoderm (TE) cell numbers and expression of blastocyst formation proteins. Our findings demonstrate that PA treatment does not impede cell fate gene localization but does disrupt proper blastocyst formation gene localization during mouse preimplantation development. OA treatment is protective and reverses PA's detrimental effects. The results advance our understanding of the impact of FFA exposure on mammalian preimplantation development.