Non-alcoholic fatty liver disease (NAFLD) is becoming the most common chronic liver disease globally. NAFLD-which can develop into liver fibrosis, nonalcoholic steatohepatosis, cirrhosis, and hepatocellular carcinoma-is defined as an excess accumulation of fat caused by abnormal lipid metabolism and excessive reactive oxygen species (ROS) generation in hepatocytes. Recently, we reported that Peroxiredoxin 5 (Prx5) plays an essential role in regulating adipogenesis and suggested the need to further investigation on the potential curative effects of Prx5 on obesity-induced fatty liver disease. In the present study, we focused on the role of Prx5 in fatty liver disease. We found that Prx5 overexpression significantly suppressed cytosolic and mitochondrial ROS generation. Additionally, Prx5 regulated the AMP-activated protein kinase pathway and lipogenic gene (sterol regulatory element binding protein-1 and FAS) expression; it also inhibited lipid accumulation, resulting in the amelioration of free fatty acid-induced hepatic steatosis. Silence of Prx5 triggered de novo lipogenesis and abnormal lipid accumulation in HepG2 cells. Concordantly, Prx5 knockout mice exhibited a high susceptibility to obesity-induced hepatic steatosis. Liver sections of Prx5-deletion mice fed on a high-fat diet displayed Oil Red O-stained dots and small leaky shapes due to immoderate fat deposition. Collectively, our findings suggest that Prx5 functions as a protective regulator in fatty liver disease and that it may be a valuable therapeutic target for the management of obesity-related metabolic diseases.