Thioesterase superfamily member 2 (Them2), a long-chain fatty acyl-CoA thioesterase that is highly expressed in oxidative tissues, interacts with phosphatidylcholine transfer protein (PC-TP) to regulate hepatic lipid and glucose metabolism and to suppress insulin signaling. High-fat diet (HFD)-fed mice lacking Them2 globally or specifically in skeletal muscle, but not liver, exhibit reduced hepatic steatosis and insulin resistance. Here, we report that the capacity of Them2 in skeletal muscle to promote hepatic steatosis and insulin resistance depends on both its catalytic activity and interaction with PC-TP. Two residues of Them2 catalytic site were mutated (N50A/D65A) to produce the inactive enzyme while maintaining its homotetrameric structure and interaction with PC-TP. Restoration of skeletal muscle expression in Them2-/- mice using recombinant adeno-associated virus revealed that wild-type (WT), but not N50A/D65A Them2, promoted HFD-induced weight gain and hepatic steatosis. This was accompanied by greater impairment of insulin sensitivity in WT compared with N50A/D65A Them2. Pharmacological inhibition or genetic ablation of PC-TP attenuated these effects. In reductionist experiments, conditioned medium collected from WT primary cultured myotubes promoted excess lipid accumulation in oleic acid-treated primary cultured hepatocytes relative to Them2-/- myotubes, which was attributable to secreted extracellular vesicles (EV). Reconstitution of Them2 expression in Them2-/- myotubes affirmed the requirements for catalytic activity and PC-TP interactions for EV to promote lipid accumulation in hepatocytes. These studies provide valuable mechanistic insights whereby Them2 in skeletal muscle promotes hepatic steatosis and establish both Them2 and PC-TP as represent attractive targets for managing metabolic dysfunction-associated steatotic liver disease.