Nonalcoholic steatohepatitis (NASH) is a severe form of nonalcoholic fatty liver disease characterized by fat accumulation and inflammation in liver. Yet, the mechanistic insight and diagnostic and therapeutic options of NASH remain incompletely understood. This study tested the roles of cysteine protease cathepsin B (CatB) in mouse NASH development. Immunoblot revealed increased liver CatB expression in NASH mice. Fructose-palmitate-cholesterol diet increased body weight gain, liver to body weight ratio, blood fasting glucose, plasma total cholesterol and alanine transaminase levels, and liver triglyceride, but decreased plasma high-density lipoprotein in wild-type mice. All these changes were blunted in CatB-deficient (Ctsb-/-) mice. In parallel to reduced expression of genes involved in liver lipid transport and lipogenesis, liver CD36, FABP4, and PPARγ protein levels were also significantly decreased in Ctsb-/- mice, although CatB deficiency did not affect liver gluconeogenesis and fatty acid beta-oxidation-associated gene expression. Mechanistic studies showed that CatB deficiency decreased liver expression of adhesion molecules, inflammatory cytokine, and chemokine, along with reduced liver inflammatory cell infiltration. CatB deficiency also promoted M2 macrophage polarization and reduced liver TGF-β1 signaling and fibrosis. Together, CatB deficiency improves liver function in NASH mice by suppressing de novo lipogenesis and liver inflammation and fibrosis.