Although the functions of metabolic enzymes and nuclear receptors in controlling physiological homeostasis have been established, their crosstalk in modulating metabolic disease has not been explored. Genetic ablation of the xenobiotic-metabolizing cytochrome P450 enzyme CYP2E1 in mice markedly induced adipose browning and increased energy expenditure to improve obesity. CYP2E1 deficiency activated the expression of hepatic peroxisome proliferator-activated receptor alpha (PPARα) target genes, including fibroblast growth factor (FGF) 21, that upon release from the liver, enhanced adipose browning and energy expenditure to decrease obesity. Nineteen metabolites were increased in Cyp2e1-null mice as revealed by global untargeted metabolomics, among which four compounds, lysophosphatidylcholine and three polyunsaturated fatty acids were found to be directly metabolized by CYP2E1 and to serve as PPARα agonists, thus explaining how CYP2E1 deficiency causes hepatic PPARα activation through increasing cellular levels of endogenous PPARα agonists. Translationally, a CYP2E1 inhibitor was found to activate the PPARα–FGF21–beige adipose axis and decrease obesity in wild-type mice, but not in liver-specific Ppara-null mice. The present results establish a metabolic crosstalk between PPARα and CYP2E1 that supports the potential for a novel anti-obesity strategy of activating adipose tissue browning by targeting the CYP2E1 to modulate endogenous metabolites beyond its canonical role in xenobiotic-metabolism.