The liver plays a central role in whole-body lipid metabolism by governing the synthesis, oxidization, transport and excretion of lipids. The unfolded protein response (UPR) was identified as a signal transduction system that is activated by ER stress. Recent studies revealed a critical role of the UPR in hepatic lipid metabolism. The IRE1/XBP1 branch of the UPR is activated by high dietary carbohydrates and controls the expression of genes involved in fatty acid and cholesterol biosynthesis. PERK mediated eIF2α phosphorylation is also required for the expression of lipogenic genes and the development of hepatic steatosis, likely by activating C/EBP and PPARγ transcription factors. Further studies to define the molecular pathways that lead to the activation of the UPR by nutritional cues in the liver, and their contribution to human metabolic disorders such as hepatic steatosis, atherosclerosis and type 2 diabetes that are associated with dysregulation of lipid homeostasis, are warranted.