Serine hydrolases are a large family of multifunctional enzymes known to influence obesity. Here, we performed activity-based protein profiling to assess the functional level of serine hydrolases in liver biopsies from lean and obese humans in order to gain mechanistic insight into the pathophysiology of metabolic disease. We identified reduced hepatic activity of carboxylesterase 2 (CES2) and arylacetamide deacetylase (AADAC) in human obesity. In primary human hepatocytes, CES2 knockdown impaired glucose storage and lipid oxidation. In mice, obesity reduced CES2, whereas adenoviral delivery of human CES2 reversed hepatic steatosis, improved glucose tolerance, and decreased inflammation. Lipidomic analysis identified a network of CES2-regulated lipids altered in human and mouse obesity. CES2 possesses triglyceride and diacylglycerol lipase activities and displayed an inverse correlation with HOMA-IR and hepatic diacylglycerol concentrations in humans. Thus, decreased CES2 is a conserved feature of obesity and plays a causative role in the pathogenesis of obesity-related metabolic disturbances. Display omitted •Obesity decreases hepatic activity of AADAC and CES2 in humans•CES2 depletion impairs lipid and glucose metabolism in primary human hepatocytes•Human CES2 expression reverses hepatic steatosis and glucose intolerance in mice•CES2 controls a hepatic lipid network dysregulated in human and mouse obesity Ruby et al. utilize activity-based protein profiling to discover decreased arylacetamide deacetylase and carboxylesterase 2 activities in livers from obese humans. Carboxylesterase 2 controls a lipid network dysregulated in human obesity to reverse hepatic steatosis, glucose intolerance, and decrease inflammation in high-fat fed mice.