Imbalance in lipid metabolism is the main cause of nonalcoholic fatty liver disease (NAFLD). While the pathogenesis of lipid accumulation mediated by extrahepatic regulators has been extensively studied, the intrahepatic regulators modulating lipid homeostasis remain unclear. Previous studies have shown that systemic administration of interleukin-22 (IL-22) protects against NAFLD; however, the role of IL-22/IL22RA1 signaling in modulating hepatic lipid metabolism remains uncertain. This study shows hepatic IL22RA1 is vital in hepatic lipid regulation. IL22RA1 is downregulated in palmitic acid-treated mouse primary hepatocytes, as well as in the livers of NAFLD model mice and patients. Hepatocyte-specific Il22ra1 knockout (HKO) mice display diet-induced hepatic steatosis, insulin resistance, impaired glucose tolerance, increased inflammation, and fibrosis compared with flox/flox mice. This is attributed to increased lipogenesis mediated by the accumulation of hepatic oxysterols, particularly, 3 beta-hydroxy-5-cholestenoic acid (3β HCA). Mechanistically, hepatic IL22RA1 deficiency facilitates 3β HCA deposition via the activating transcription factor 3 (ATF3)/oxysterol 7 alpha-hydroxylase (CYP7B1) axis. Notably, 3β HCA facilitates lipogenesis in MPHs and human liver organoids (HLOs) by activating LXR-alpha signaling, but IL-22 treatment attenuates this effect. Additionally, restoring CYP7B1 or silencing hepatic ATF3 reduces both hepatic 3β HCA and lipid contents in HKO mice. These findings indicate that IL22RA1 plays a crucial role in maintaining hepatic lipid homeostasis in an ATF3/CYP7B1-dependent manner, and establish a link between 3β HCA and hepatic lipid homeostasis.