Background and Aims: An imbalance in lipid metabolism is the main cause of 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 IL-22 protects against NAFLD; however, the role of IL-22/IL22RA1 signaling in modulating hepatic lipid metabolism remains uncertain. Approach and Results: This study shows that 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 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 (3 beta HCA). Mechanistically, hepatic IL22RA1 deficiency facilitates 3 beta HCA deposition through the activating transcription factor 3/oxysterol 7 alpha-hydroxylase axis. Notably, 3 beta HCA facilitates lipogenesis in mouse primary hepatocytes and human liver organoids by activating liver X receptor-alpha signaling, but IL-22 treatment attenuates this effect. Additionally, restoring oxysterol 7 alpha-hydroxylase or silencing hepatic activating transcription factor 3 reduces both hepatic 3 beta HCA and lipid contents in hepatocyte-specific Il22ra1 knockout mice. Conclusions: These findings indicate that IL22RA1 plays a crucial role in maintaining hepatic lipid homeostasis in an activating transcription factor 3/oxysterol 7 alpha-hydroxylase-dependent manner and establish a link between 3 beta HCA and hepatic lipid homeostasis.