Hepatic steatosis is a frequent complication in nonobese patients with breast cancer treated with tamoxifen, a potent antagonist of estrogen. In addition, hepatic steatosis became evident spontaneously in the aromatase-deficient (ArKO) mouse, which lacks intrinsic estrogen production. These clinical and laboratory observations suggest that estrogen helps to maintain constitutive lipid metabolism. To clarify this hypothesis, we characterized the expression and activity in ArKO mouse liver of enzymes involved in peroxisomal and mitochondrial fatty acid beta-oxidation. Northern analysis showed reduced expression of mRNAs for very long fatty acyl-CoA synthetase, peroxisomal fatty acyl-CoA oxidase, and medium-chain acyl-CoA dehydrogenase, enzymes required in fatty acid beta-oxidation. In vitro assays of fatty acid beta-oxidation activity using very long (C24:0), long (C16:0), or medium (C12:0) chain fatty acids as the substrates confirmed that the corresponding activities are also diminished. Impaired gene expression and enzyme activities of fatty acid beta-oxidation were restored to the wild-type levels, and hepatic steatosis was substantially diminished in animals treated with 17beta-estradiol. Wild-type and ArKO mice showed no difference in the binding activities of the hepatic nuclear extracts to a peroxisome proliferator response element. These findings demonstrate the pivotal role of estrogen in supporting constitutive hepatic expression of genes involved in lipid beta-oxidation and in maintaining hepatic lipid homeostasis.