Aberrant histone methylation profile is reported to correlate with the development and progression of NAFLD during obesity. However, the identification of specific epigenetic modifiers involved in this process remains poorly understood. Here, we identify the histone demethylase Plant Homeodomain Finger 2 (Phf2) as a new transcriptional co-activator of the transcription factor Carbohydrate Responsive Element Binding Protein (ChREBP). By specifically erasing H3K9me2 methyl-marks on the promoter of ChREBP-regulated genes, Phf2 facilitates incorporation of metabolic precursors into mono-unsaturated fatty acids, leading to hepatosteatosis development in the absence of inflammation and insulin resistance. Moreover, the Phf2-mediated activation of the transcription factor NF-E2-related factor 2 (Nrf2) further reroutes glucose fluxes toward the pentose phosphate pathway and glutathione biosynthesis, protecting the liver from oxidative stress and fibrogenesis in response to diet-induced obesity. Overall, our findings establish a downstream epigenetic checkpoint, whereby Phf2, through facilitating H3K9me2 demethylation at specific gene promoters, protects liver from the pathogenesis progression of NAFLD.