Nonalcoholic fatty liver disease, characterized by the accumulation of triacylglycerols (TGs) and other lipids in the liver, often accompanies obesity and is a risk factor for nonalcoholic steatohepatitis and fibrosis. To treat or prevent fatty liver, a thorough understanding of hepatic fatty acid and TG metabolism is crucial. To investigate the role of acyl CoA:diacylglycerol acyltransferase 1 (DGAT1), a key enzyme of TG synthesis, in fatty liver development, we studied mice with global and liver-specific knockout of Dgat1. DGAT1 was required for hepatic steatosis induced by a high-fat diet and prolonged fasting, which are both characterized by delivery of exogenous fatty acids to the liver. Studies in primary hepatocytes showed that DGAT1 deficiency protected against hepatic steatosis by reducing synthesis and increasing the oxidation of fatty acids. In contrast, lipodystrophy (aP2-SREBP-1c436) and liver X receptor activation (T0901317), which increase de novo fatty acid synthesis in liver, caused steatosis independently of DGAT1. Pharmacologic inhibition of Dgat1 with antisense oligonucleotides protected against fatty liver induced by a high-fat diet.Our findings identify a specific role for hepatic DGAT1 in esterification of exogenous fatty acids and indicate that DGAT1 contributes to hepatic steatosis induced by this mechanism.