Hepatic steatosis is characterised by excessive triacylglycerol accumulation and is strongly associated with insulin resistance. An inability to efficiently mobilise liver triacylglycerol may be a key event mediating hepatic steatosis. Adipose triacylglycerol lipase (ATGL) is a key triacylglycerol lipase in the liver and we hypothesised that liver-specific overproduction of ATGL would reduce steatosis and enhance insulin action in obese rodents. METHODS: Studies of fatty acid metabolism were conducted in primary hepatocytes isolated from wild-type and Atgl (also known as Pnpla2)(-/-) mice. An ATGL adenovirus was utilised to overproduce ATGL in the livers of obese insulin-resistant C57Bl/6 mice (Ad-ATGL). Blood chemistry, hepatic lipid content and insulin sensitivity were assessed in mice. RESULTS: Triacylglycerol content was increased in Atgl (-/-) hepatocytes and was associated with increased fatty acid uptake and impaired fatty acid oxidation. ATGL adenovirus administration in obese mice increased the production of hepatic ATGL protein and reduced triacylglycerol, diacylglycerol and ceramide content in the liver. Overproduction of ATGL improved insulin signal transduction in the liver but did not affect fasting glycaemia or insulinaemia. Inflammatory signalling was not suppressed by ATGL overproduction. While ATGL overproduction increased plasma non-esterified fatty acids, neither lipid deposition nor insulin-stimulated glucose uptake were affected in skeletal muscle. CONCLUSIONS/INTERPRETATION: Liver ATGL overproduction decreases hepatic steatosis and mildly enhances liver insulin sensitivity. These effects are not sufficient to improve fasting glycaemia or insulinaemia in rodent obesity.