The cell death‐inducing DNA fragmentation factor alpha‐like effector c (CIDEC; also known in rodents as FSP27 or fat‐specific protein 27) is a lipid droplet‐associated protein that promotes intracellular triglyceride (TAG) storage. CIDEC/Fsp27 is highly expressed in adipose tissue, but undetectable in normal liver. However, its hepatic expression rises during fasting or under genetic or diet‐induced hepatosteatosis in both mice and patients. Herein, we demonstrate that CIDEC/Fsp27 is a direct transcriptional target of the nuclear receptor PPARα (peroxisome proliferator‐activated receptor alpha) in both mouse and human hepatocytes, and that preventing Fsp27 induction accelerates PPARα‐stimulated fatty acid oxidation. We show that adenoviral‐mediated silencing of hepatic Fsp27 abolishes fasting‐induced liver steatosis in the absence of changes in plasma lipids. Finally, we report that anti‐Fsp27 short hairpin RNA and PPARα agonists synergize to ameliorate hepatosteatosis in mice fed a high fat diet. Conclusions: Together, our data highlight the physiological importance of CIDEC/Fsp27 in TAG homeostasis under both physiological and pathological liver steatosis. Our results also suggest that patients taking fibrates likely have elevated levels of hepatic CIDEC, which may limit the efficient mobilization and catabolism of hepatic TAGs. (Hepatology 2015;61:1227–1238)