Background: Obesity and type 2 diabetes (T2D) are closely associated with hepatic steatosis (HS), which if untreated can advance to serious liver conditions. Since insulin promotes hepatic lipogenesis, reducing hyperinsulinemia may help in treating HS. E4orf1 is an adenovirus-derived protein that improves glucose clearance independent of insulin, lowers insulin amount required for glucose disposal, and reduces HS. As a next step, we evaluated the mechanism for E4orf1-induced reduction in HS and tested that E4orf1 does not induce hypoglycemia, an important attribute for its application as a potential anti-diabetic agent. Methods: C57Bl/6J mice that transgenically express E4orf1 in adipose tissue (E4orf-Tg) and wild-type (WT) mice received a chow diet for 6 weeks, followed by a high-fat (HF) diet for additional 10 weeks. Body composition, blood glucose, and serum insulin levels upon glucose load were measured at 0, 6, 7, and 16 weeks. Serum free fatty acid (FFA), triglyceride (TG), and hepatic TG were measured at study termination. We compared histology and the mRNA/protein markers of hepatic and adipose tissue lipid metabolism between the two groups of mice. Results: On chow diet, both groups remained normoglycemic, but E4orf1 expression reduced insulin response. On HF diet, glycemic control in WT deteriorated, whereas E4orf1 significantly enhanced glycemic control, lowered insulin response, reduced hepatic triglycerides, and serum FFA. Overall, a comparison of hepatic mRNA and/or protein expression suggested that E4orf1 expression significantly decreased de novo lipogenesis (DNL) and intracellular lipid transport and increased fat oxidation and TG export. Adipose tissue mRNA and protein markers suggested that E4orf1 expression lowered DNL and increased lipolysis. Conclusion: Considering that E4orf1 is not secreted in circulation, we postulate that reduced endogenous insulin in E4orf1 mice indirectly contributes to reduce HS by altering hepatic lipid metabolism, including lipogenesis. This study underscores the possibility of indirectly impacting HS by manipulating adipose tissue metabolism.