The liver is an essential organ for maintaining homeostasis and is vital for storage, synthesis, oxidation, and recirculation of lipid in fed and fasted states. In response to fasting, fatty acids (FAs) flux from adipose tissue to the liver and are converted to acyl-CoAs for incorporation into complex lipids or transportation into the mitochondria for oxidation. The latter process is orchestrated by a group of proteins that are transcriptional targets of peroxisome proliferator activated receptor α (PPARα). However, little is known about hepatic acyl-CoA thioesterase 1 (ACOT1), a member of the broader acyl-CoA thioesterase family that catalyzes the conversion of acyl-CoAs back to FAs and coenzyme A. Thus, this research is aimed to understand the role of ACOT1 in fasting lipid metabolism. To investigate its physiological importance, we employed adenovirus-mediated knockdown, overexpression in tissue culture, as well as generation of a whole-body Acot1 knockout mouse line. Our results show that ACOT1 preferentially hydrolyzes acyl-CoA molecules that are destine for mitochondrial β-oxidation. As such, acute Acot1 knockdown results in reduced liver triglyceride (TG) and enhanced FA oxidation in vivo and in vitro. Increased FA oxidation correlated to greater hepatic glucose production and storage. Additionally, we determined that ACOT1 regulates PPARα by providing FA ligands. As such, supplementation with a PPARα synthetic ligand rescues the Acot1 knockdown phenotype. Furthermore, Acot1 overexpression increases PPARα activity only when ACOT1 is catalytically active. Together these data suggest that ACOT1 regulates PPARα through its hydrolysis product. We also discovered that ACOT1 translocates to the nucleus during prolonged fasting, potentially to provide a local pool of FAs to activate PPARα. Thus, acute Acot1 knockdown solicits enhanced FA oxidation, yet reduces PPARα target gene expression. Complications of this disconnect between metabolism and gene expression was evident by increased oxidative stress and inflammation, often seen in fibrotic and cirrhotic stages of non-alcoholic fatty liver disease (NAFLD), when Acot1 was knocked down. To further our investigation of ACOT1, we compared whole-body Acot1 knockout mice to their wild type littermates. We demonstrate that Acot1 knockout lead reduces adiposity, by decreasing adipocyte size and increasing adipocyte number. Acot1 knockout also reduced hepatic TG, providing protection from oxidative stress and inflammation that precedes TG accumulation. However, Acot1 knockout reduced glucose tolerance suggesting impaired glucose homeostasis. These results suggest Acot1 knockout impaired lipid storage potential, increasing lipid intermediates, and contributing to glucose intolerance. Taken together, hepatic ACOT1 regulates FA oxidation and protects from oxidative stress and inflammation, whereas whole-body ACOT1 contributes to lipid storage.