Increased lipogenesis, together with hyperlipidemia and increased fat deposition, contribute to obesity and associated metabolic disorders including nonalcoholic fatty liver disease. Here we show that carboxylesterase 1/esterase‐x (Ces1/Es‐x) plays a regulatory role in hepatic fat metabolism in the mouse. We demonstrate that Ces1/Es‐x knockout mice present with increased hepatic lipogenesis and with oversecretion of apolipoprotein B (apoB)‐containing lipoproteins (hepatic very‐low density lipoproteins), which leads to hyperlipidemia and increased fat deposition in peripheral tissues. Consequently, Ces1/Es‐x knockout mice develop obesity, fatty liver, hyperinsulinemia, and insulin insensitivity on chow diet without change in food intake and present with decreased energy expenditure. Ces1/Es‐x deficiency prevents the release of polyunsaturated fatty acids from triacylglycerol stores, leading to an up‐regulation of sterol regulatory element binding protein 1c‐mediated lipogenesis, which can be reversed with dietary ω‐3 fatty acids. Conclusion: These studies support a role for Ces1/Es‐x in the partitioning of regulatory fatty acids and concomitant control of hepatic lipid biosynthesis, secretion, and deposition. (HEPATOLOGY 2012;56:2188–2198)