Type 2 diabetes (T2D) is often accompanied with an induction of retinaldehyde dehydrogenase 1 (RALDH1 or ALDH1A1) expression and a consequent decrease in hepatic retinaldehyde (Rald) levels. However, the role of hepatic Rald deficiency in T2D progression remains unclear. In this study, we demonstrated that reversing T2D-mediated hepatic Rald deficiency by Rald or citral treatments, or liver-specific silencing substantially lowered fasting glycemia levels, inhibited hepatic glucogenesis, and downregulated phosphoenolpyruvate carboxykinase 1 (PCK1) and glucose-6-phosphatase (G6PC) expression in diabetic mice. Fasting glycemia and mRNA expression levels were strongly negatively correlated with hepatic Rald levels, indicating the involvement of hepatic Rald depletion in T2D deterioration. A similar result that liver-specific silencing improved glucose metabolism was also observed in high-fat diet-fed mice. In primary human hepatocytes and oleic acid-treated HepG2 cells, Rald or Rald +  silencing resulted in decreased glucose production and downregulated / mRNA and protein expression. Mechanistically, Rald downregulated direct repeat 1-mediated and expression by antagonizing retinoid X receptor , as confirmed by luciferase reporter assays and molecular docking. These results highlight the link between hepatic Rald deficiency, glucose dyshomeostasis, and the progression of T2D, whilst also suggesting RALDH1 as a potential therapeutic target for T2D.