Carboxylesterase 3/triacylglycerol hydrolase (Ces3/TGH) participates in hepatic very low-density lipoprotein (VLDL) assembly and in adipose tissue basal lipolysis. Global ablation of Ces3/Tgh expression decreases serum triacylglycerol (TG) and nonesterified fatty acid levels and improves insulin sensitivity. To understand the tissue-specific role of Ces3/TGH in lipid and glucose homeostasis, we generated mice with a liver-specific deletion of Ces3/Tgh expression (L-TGH knockout [KO]). Elimination of hepatic Ces3/Tgh expression dramatically decreased plasma VLDL TG and VLDL cholesterol concentrations but only moderately increased liver TG levels in mice fed a standard chow diet. Significantly reduced plasma TG and cholesterol without hepatic steatosis were also observed in L-TGH KO mice challenged with a high-fat, high-cholesterol diet. L-TGH KO mice presented with increased plasma ketone bodies and hepatic fatty acid oxidation. Intrahepatic TG in L-TGH KO mice was stored in significantly smaller lipid droplets. Augmented hepatic TG levels in chow-fed L-TGH KO mice did not affect glucose tolerance or glucose production from hepatocytes, but impaired insulin tolerance was observed in female mice. Conclusion: Our data suggest that ablation of hepatic Ces3/Tgh expression decreases plasma lipid levels without causing severe hepatic steatosis. (HEPATOLOGY 2012;56:2154–2162)