Lipotoxicity caused by excess free fatty acids, particularly saturated fatty acids (SFAs) such as palmitic acid (PA), is one of the most important pathogenesis of nonalcoholic fatty liver disease (NAFLD). However, unsaturated fatty acids (UFAs), such as oleic acid (OA), are nontoxic and can combat SFA-induced toxicity through alleviation of cell apoptosis, endoplasmic reticulum stress (ER stress) and lipids metabolism disorder. However, whether OA is able to regulate autophagy is largely unknown. So, this study aims to investigate the mechanism underlying OA mediated modulation of autophagy in hepatocytes and mice with NAFLD. In vitro, human hepatoma cell line HepG2 cells, human normal liver cells L-02 and mouse normal liver cells AML12 were treated with palmitic acid (PA)/tunicamycin (TM) or/and OA for 48 h. In vivo, C57/BL6 mice were fed with high fat diet (HFD) to induce NAFLD. And the HFD was partial replaced by olive oil to observe the protective effects of olive oil. We demonstrated that PA/TM impaired cell viability and induced cellular apoptosis in HepG2 cells and L-02 cells. Moreover, PA/TM induced autophagy impairment by reducing the nuclear translocation of transcription factor EB (TFEB) and inhibiting the activity of CTSB. However, OA substantially alleviated PA/TM induced cellular apoptosis and autophagy dysfunction in hepatocytes. Additionally, restoring autophagy function is able to reduce ER stress. Similarly, HFD for 20 weeks successfully established NAFLD model in C57/BL6 mice, and significant autophagy impairment were observed in liver tissues. Noteworthily, 30% replacement of HFD with olive oil had profoundly reversed NAFLD. It significantly impoved steatosis, and reduced autophagy dysfunction, ER stress and apoptosis in liver tissue. Conclusively, these data demonstrated that OA is able to effectively impove autophagy dysfunction under the context of both PA and ER stress inducer induced lipotoxicity, and OA mediated regulation of lysosome dysfunction through TFEB plays an important role, suggesting that the regulation of ER stress-autophagy axis is a critical mechanism in OA driven protection in NAFLD.