The mechanisms underlying the pathogenesis of steatosis and insulin resistance in nonalcoholic fatty liver disease remain elusive. Increased phosphorylation of hepatic p38 has long been noticed in fatty liver; however, whether the activation of hepatic p38 is a cause or consequence of liver steatosis is unclear. Here, we demonstrate that hepatic p38 activation by MKK6 overexpression in the liver of mice induces severe liver steatosis, reduces fat mass, and elevates circulating fatty acid levels in a hepatic p38α- and FGF21-dependent manner. Mechanistically, through increasing FGF21 production from liver, hepatic p38 activation increases the influx of fatty acids from adipose tissue to liver, leading to hepatic ectopic lipid accumulation and insulin resistance. Although hepatic p38 activation exhibits favorable effects in peripheral tissues, it impairs the hepatic FGF21 action by facilitating the ubiquitination and degradation of FGF21 receptor cofactor β-Klotho. Consistently, we show that when p38 phosphorylation and FGF21 expression are increased, β-Klotho protein levels are decreased in the fatty liver of both mice and patients. In conclusion, our study reveals previously undescribed effects of hepatic p38 activation on systemic metabolism and provides new insights into the roles of hepatic p38α, FGF21, and β-Klotho in the pathogenesis of nonalcoholic fatty liver disease.