Carboxylesterase 2 (CES2) is expressed mainly in liver and intestine, but most abundantly in intestine. It hydrolyzes carboxylester, thioester, and amide bonds in many exogenous and endogenous compounds, including lipids. CES2 therefore not only plays an important role in the metabolism of many (pro-)drugs, toxins and pesticides, directly influencing pharmacology and toxicology in humans, but it is also involved in energy homeostasis, affecting lipid and glucose metabolism. In this study we investigated the pharmacological and physiological functions of CES2. We constructed Ces2 cluster knockout mice lacking all eight Ces2 genes (Ces2-/- strain) as well as humanized hepatic or intestinal CES2 transgenic strains in this Ces2-/- background. We showed that oral availability and tissue disposition of capecitabine were drastically increased in Ces2-/- mice, and tissue-specifically decreased by intestinal and hepatic human CES2 (hCES2) activity. The metabolism of the chemotherapeutic agent vinorelbine was strongly reduced in Ces2-/- mice, but only marginally rescued by hCES2 expression. On the other hand, Ces2-/- mice exhibited fatty liver, adipositis, hypercholesterolemia and diminished glucose tolerance and insulin sensitivity, but without body mass changes. Paradoxically, hepatic hCES2 expression rescued these metabolic phenotypes but increased liver size, adipose tissue mass and overall body weight, suggesting a "healthy" obesity phenotype. In contrast, intestinal hCES2 expression efficiently rescued all phenotypes, and even improved some parameters, including body weight, relative to the wild-type baseline values. Our results suggest that the induction of intestinal hCES2 may combat most, if not all, of the adverse effects of metabolic syndrome. These CES2 mouse models will provide powerful preclinical tools to enhance drug development, increase physiological insights, and explore potential solutions for metabolic syndrome-associated disorders.