Free fatty acid-induced lipotoxicity via increased endoplasmic reticulum (ER) stress and hepatocyte apoptosis is a key pathological mechanism of non-alcoholic steatohepatitis. A role of hypoxia-inducible factor 1α (HIF-1α) in this process has been suggested, but direct evidence is lacking. Here, we used HepG2 cells as a model to study whether HIF-1α can reduce palmitic acid-induced lipotoxicity and ER stress. In HepG2 cells treated with 500 µM palmitic acid, HIF-1α expression increased transiently, the decline was associated with increased cleaved caspase-3 expression. Overexpression and knockdown of HIF-1α decreased and exacerbated, respectively, palmitic acid-induced lipoapoptosis. The overexpression also blunted upregulation of the ER stress markers, C/EBP homologous protein (CHOP) and chaperone immunoglobulin heavy chain binding protein (Bip), while the knockdown increased the level of CHOP. In line with this, CHOP promoter activity decreased following HIF-1α binding to the CHOP promoter hypoxia response element. These results indicate that hepatocyte lipotoxicity is associated with decreased HIF-1α expression. It also suggests that upregulation of HIF-1α can be a possible strategy to reduce lipotoxicity in non-alcoholic fatty liver disease.