Non-alcoholic fatty liver disease is associated with an irregular serine metabolism. Serine hydroxymethyltransferase 2 (SHMT2) is a liver enzyme that breaks down serine into glycine and one-carbon (1C) units critical for liver methylation reactions and overall health. However, the contribution of SHMT2 to hepatic 1C homeostasis and biological functions has yet to be defined in genetically modified animal models. We created a mouse strain with targeted SHMT2 knockout in hepatocytes to investigate this. The absence of SHMT2 increased serine and glycine levels in circulation, decreased liver methylation potential, and increased susceptibility to fatty liver disease. Interestingly, SHMT2-deficient mice developed simultaneous fatty liver, but when fed a diet high in fat, fructose, and cholesterol, they had significantly less inflammation and fibrosis. This study highlights the critical role of SHMT2 in maintaining hepatic 1C homeostasis and its stage-specific functions in the pathogenesis of NAFLD.