Development of hepatic steatosis and its progression to steatohepatitis may be the consequence of dysfunction of several metabolic pathways, such as triglyceride synthesis, very low‐density lipoprotein (VLDL) secretion, and fatty acid β‐oxidation. Peroxisome proliferator‐activated receptor γ coactivator‐1β (PGC‐1β) is a master regulator of mitochondrial biogenesis and oxidative metabolism, lipogenesis, and triglyceride (TG) secretion. Here we generated a novel mouse model with constitutive hepatic activation of PGC‐1β and studied the role of this transcriptional coactivator in dietary‐induced steatosis and steatohepatitis. Selective activation of PGC‐1β within hepatocytes is able to protect the liver from lipid overload and from progression to fibrosis. The protective function exerted by PGC‐1β is due to its ability to induce mitochondrial oxidative phosphorylation, fatty acid β‐oxidation, and citrate cycle, as well as to decrease oxidative stress and promote TG secretion in the blood stream. These findings bolster the concept that a combined hepatic specific action of PGC‐1β on lipid synthesis and secretion, as well as on mitochondrial biogenesis and function, could protect against steatohepatitis. (HEPATOLOGY 2013)