BACKGROUND & AIMS: Glucagon-like peptide-1 (GLP-1), a gut-derived peptide degraded by dipeptidyl peptidase-4 (DPP4), stimulates insulin secretion in response to nutrients, yet its direct effect on the liver is controversial. We investigated the effects of GLP-1 on hepatic fat and glucose metabolism and elucidated its mechanism of action. METHODS: Hepatic fat metabolism, including lipogenic enzymes and signal transduction regulators, was assessed in livers of DPP4-deficient rats (DPP4-) with chronically elevated GLP-1 and in GLP-1-treated primary hepatocytes. The effect of chronic elevated GLP-1 on insulin sensitivity was measured using the hyperinsulinemic-euglycemic clamp. RESULTS: Normal and high fat diet fed DPP4-rats displayed reduced hepatic triglycerides, accompanied by down-regulation of lipogenesis enzymes and parallel up-regulation of carnitine palmitoyltransferase-1, a key enzyme in fatty acid beta-oxidation. In vitro studies demonstrated that these effects were directly induced by GLP-1. Mechanistically, GLP-1 increased cAMP in hepatocytes, resulting in the phosphorylation of cAMP-activated protein kinase (AMPK), a suppressor of lipogenesis. Indeed, hepatocytes expressing a dominant negative Ad-DN-AMPK displayed attenuated GLP-1 effects on AMPK phosphorylation and its downstream lipogenic targets. Importantly, normoglycemic DPP4-rats did not display improved hepatic insulin sensitivity in vivo, suggesting a direct effect of GLP-1 on fat metabolism. Finally, DPP4-rats expressed lower levels of hepatic proinflammatory and profibrotic cytokines in response to nutrient stimuli. CONCLUSIONS: GLP-1 suppresses hepatic lipogenesis via activation of the AMPK pathway. GLP-1 inhibitory effects on hepatic fat accumulation and nutrient-induced hepatic proinflammatory response suggest GLP-1 analogs as novel therapies for non-alcoholic fatty liver diseases.