Nonalcoholic fatty liver disease (NAFLD) is associated with all features of the metabolic syndrome. Although deposition of excess triglycerides within liver cells, a hallmark of NAFLD, is associated with a loss of insulin sensitivity, it is not clear which cellular abnormality arises first. We have explored this in mice overexpressing carbohydrate responsive element-binding protein (ChREBP). On a standard diet, mice overexpressing ChREBP remained insulin sensitive, despite increased expression of genes involved in lipogenesis/fatty acid esterification and resultant hepatic steatosis (simple fatty liver). Lipidomic analysis revealed that the steatosis was associated with increased accumulation of monounsaturated fatty acids (MUFAs). In primary cultures of mouse hepatocytes, ChREBP overexpression induced expression of stearoyl-CoA desaturase 1 (Scd1), the enzyme responsible for the conversion of saturated fatty acids (SFAs) into MUFAs. SFA impairment of insulin-responsive Akt phosphorylation was therefore rescued by the elevation of Scd1 levels upon ChREBP overexpression, whereas pharmacological or shRNA-mediated reduction of Scd1 activity decreased the beneficial effect of ChREBP on Akt phosphorylation. Importantly, ChREBP-overexpressing mice fed a high-fat diet showed normal insulin levels and improved insulin signaling and glucose tolerance compared with controls, despite having greater hepatic steatosis. Finally, ChREBP expression in liver biopsies from patients with nonalcoholic steatohepatitis was increased when steatosis was greater than 50% and decreased in the presence of severe insulin resistance. Together, these results demonstrate that increased ChREBP can dissociate hepatic steatosis from insulin resistance, with beneficial effects on both glucose and lipid metabolism.