gp78 is a membrane-anchored ubiquitin ligase mediating the degradation of HMG-CoA reductase (HMGCR) and Insig-1. As a rate-limiting enzyme in cholesterol biosynthesis, HMGCR undergoes rapid sterol-promoted degradation. In contrast, destruction of Insig-1 releases its inhibition on SREBP and stimulates the expression of lipogenic genes. Thus, gp78 has opposite effects on lipid biosynthesis. We here generated liver-specific gp78 knockout (L-gp78(-/-)) mice and showed that although the degradation of HMGCR was blunted, SREBP was suppressed due to the elevation of Insig-1/-2, and therefore the lipid biosynthesis was decreased. The L-gp78(-/-) mice were protected from diet-/age-induced obesity and glucose intolerance. The livers of L-gp78(-/-) mice produced more FGF21, which activated thermogenesis in brown adipocytes and enhanced energy expenditure. Together, the major function of gp78 in liver is regulating lipid biosynthesis through SREBP pathway. Ablation of gp78 decreases the lipid levels and increases FGF21, and is beneficial to patients with metabolic diseases.