Phosphoethanolamine cytidylyltransferase (ECT) catalyzes the rate-controlling step in a major pathway for the synthesis of phosphatidylethanolamine (PtdEtn). Hepatocyte-specific deletion of the ECT gene in mice resulted in normal appearing animals without overt signs of liver injury or inflammation. The molecular species of PtdEtn in the ECT-deficient livers were significantly altered compared with controls and matched the composition of the phosphatidylserine (PtdSer) pool, illustrating the complete reliance on the PtdSer decarboxylase pathway for PtdEtn synthesis. PtdSer structure was controlled by the substrate specificity of PtdSer synthase that selectively converted phosphatidylcholine molecular species containing stearate paired with a polyunsaturated fatty acid to PtdSer. There was no evidence for fatty acid remodeling of PtdEtn. The elimination of diacylglycerol utilization by the CDP-ethanolamine pathway led to a 10-fold increase in triacylglycerols in the ECT-deficient hepatocytes that became engorged with lipid droplets. Triacylglycerol accumulation was associated with a significant elevation in the expression of the transcription factors and target genes that drive de novo lipogenesis. The absence of the ECT pathway for diacylglycerol utilization at the endoplasmic reticulum triggers increased fatty acid synthesis to support the formation of triacylglycerols leading to liver steatosis.