The integration of metabolic signals required for the regulation of hepatic lipid homeostasis is complex. Previously, we showed that mice lacking expression of the mitogen-activated protein kinase (MAPK) phosphatase-1 (MKP-1) have increased fatty acid oxidation and are protected from the development of hepatic steatosis. Here, we show that leptin receptor-deficient (db/db) mice lacking MKP-1 are also resistant to the development of hepatic steatosis. Microarray analyses of livers from db/db mice lacking MKP-1 showed suppression of peroxisome proliferator-activated receptor ␥ (PPAR␥) target genes. We identified the fat-specific protein 27 (Fsp27), which promotes PPAR␥-mediated hepatic steatosis, as repressed in livers of both db/db and high fat diet-fed mice lacking MKP-1. Hepatocytes from MKP-1-deficient mice exhibited reduced PPAR␥-induced lipid droplet formation. Mechanistically, loss of MKP-1 inhibited PPAR␥ function by increasing MAPK-dependent phosphorylation on PPAR␥ at its inhibitory residue of serine 112. These results demonstrate that in addition to inhibiting hepatic fatty acid oxidation, MKP-1 promotes hepatic lipogenic gene expression through PPAR␥. Hence, MKP-1 plays an important role in MAPK-mediated control of hepatic lipid homeostasis.The liver represents a tissue in which multiple signals are sensed and subsequently integrated to maintain metabolic homeostasis. An imbalance in how these metabolic cues are relayed through signaling pathways that lead to the expression of genes involved in hepatic metabolism can result in excess accumulation of fat in the liver (steatosis). A steatotic liver can progress to steatohepatitis, cirrhosis, fibrosis, and ultimately, either liver failure or hepatocellular carcinoma. Therefore, defining the molecular events surrounding the regulation of hepatic lipid homeostasis is of paramount importance, and elucidating the contributing facets of hepatic lipid regulation will provide insight in to both physiological and pathophysiological aspects of liver function (1).The mitogen-activated protein kinase (MAPK) family includes the growth factor-responsive extracellular signal-regulated kinases 1 and 2 (ERK1/2), and the stress-responsive MAPKs, p38 MAPK and c-jun NH 2 -terminal kinase (JNK) (2, 3). MAPK activation is mediated by phosphorylation on a threonine and tyrosine residue in the activation loop by upstream MAP kinase kinases in response to diverse stimuli (2, 3). The MAPKs have been implicated in the regulation of hepatic lipid deposition. Mice lacking expression of JNK1, but not JNK2, have an improved steatotic phenotype in a model of methionine and choline deficiency (4), whereas mice lacking JNK1 specifically in the liver are insulin-resistant and develop hepatic steatosis (5). p38 MAPK promotes fatty acid -oxidation by direct phosphorylation of the nuclear receptor, peroxisome proliferator-activated receptor (PPAR) 3 ␣, which plays an important role in hepatic lipid metabolism (6), and in cultured hepatocytes p38 MAPK activity has been linked to decreased he...