Interleukin-25 or IL-17E is a member of IL-17 cytokine family and has immune-modulating activities. The role of IL-25 in maintaining lipid metabolic homeostasis remains unknown. We investigated the effects of exogenous IL-25 or deficiency of IL-25 on hepatic lipid accumulation. IL-25 expression was examined in paraffin-embedded tissue sections of liver from patients or in the livers from mice. Mouse model of steatosis was induced by feeding a high-fat diet (HFD). Extent of steatosis as well as expression of cytokines, key enzymes for lipid metabolic pathways, markers for Kupffer cells/macrophages, and lipid droplet proteins were analyzed. Our results show that hepatic steatosis in mice was accompanied by increased lipid droplet proteins, but decreased IL-25 in the liver. Decreased hepatic IL-25 was also observed in patients with fatty liver. Administration of IL-25 to HFD-fed wild-type mice led to a significant improvement in hepatic steatosis. This effect was associated with increased expression of IL-13, development of alternatively-activated Kupffer cells/macrophages, and decreased expression of lipid droplet proteins in the liver. In contrast, administration of IL-25 to HFD-fed mice deficient in STAT6 or IL-13 had no effects. In addition, stimulation of primary hepatocytes with IL-13, but not IL-25, resulted in down-regulation of lipid droplet proteins. Finally, mice deficient in IL-25 had exacerbated hepatic lipid accumulation when fed the HFD. These data demonstrate that dysregulated IL-25 expression contributes to lipid accumulation, while exogenous IL-25 protects against hepatic steatosis through IL-13 activation of STAT6. IL-25 and IL-13 are potential therapeutic agents for hepatic steatosis and associated pathologies.