Conditional knockout mice with targeted disruption of B-cell associated protein (BAP)31 in adult mouse liver were generated and challenged with a high-fat diet (HFD) for 36 or 96 days and markers of obesity, diabetes, and hepatic steatosis were determined. Mutant mice were indistinguishable from WT littermates, but exhibited increased HFD-induced obesity. BAP31-deletion in hepatocytes increased the expression of SREBP1C and the target genes, including acetyl-CoA carboxylase 1 and stearoyl-CoA desaturase-1, and increased hepatic lipid accumulation and HFD-induced liver steatosis. Immunoprecipitation assay showed that BAP31 interacts with SREBP1C and insulin-induced gene 1 (INSIG1), and BAP31-deletion reduces INSIG1 expression, suggesting that BAP31 may regulate SREBP1C activity by modulating INSIG1 protein levels. Additionally, BAP31-deletion induced glucose and insulin intolerance, decreased Akt and glycogen synthase kinase 3β phosphorylation, and enhanced hepatic glucose production in mice. Expression of endoplasmic reticulum (ER) stress markers was significantly induced in BAP31-mutant mice. HFD-induced inflammation was aggravated in mutant mice, along with increased c-Jun N-terminal kinase and nuclear factor-κB activation. These findings demonstrate that BAP31-deletion induces SREBP activation and promotes hepatic lipid accumulation, reduces insulin signaling, impairs glucose/insulin tolerance, and increases ER stress and hepatic inflammation, explaining the protective roles of BAP31 in the development of liver steatosis and insulin resistance in HFD-induced obesity in animal models.