During normal proliferation, hepatocytes accumulate triglycerides (TGs) in lipid droplets (LDs), but the underlying mechanisms and functional significance of this steatosis are unknown. In the current study, we examined the coordinated regulation of cell cycle progression and LD accumulation. As previously shown, hepatocytes develop increased LD content after mitogen stimulation. Cyclin D1, in addition to regulating proliferation, was both necessary and sufficient to promote LD accumulation in response to mitogens. Interestingly, cyclin D1 promotes LD accumulation by inhibiting the breakdown of TGs by lipolysis through a mechanism involving decreased lipophagy, the autophagic degradation of LDs. To examine whether inhibition of lipolysis is important for cell cycle progression, we overexpressed adipose TG lipase (ATGL), a key enzyme involved in TG breakdown. As expected, ATGL reduced LD content but also markedly inhibited hepatocyte proliferation, suggesting that lipolysis regulates a previously uncharacterized cell cycle checkpoint. Consistent with this, in mitogen-stimulated cells with small interfering RNA-mediated depletion of cyclin D1 (which inhibits proliferation and stimulates lipolysis), concurrent ATGL knockdown restored progression into S phase. Following partial hepatectomy, a model of robust hepatocyte proliferation in vivo, ATGL overexpression led to decreased LD content, cell cycle inhibition, and marked liver injury, further indicating that down-regulation of lipolysis is important for normal hepatocyte proliferation. Conclusion: We suggest a new relationship between steatosis and proliferation in hepatocytes: cyclin D1 inhibits lipolysis, resulting in LD accumulation, and suppression of lipolysis is necessary for cell cycle progression.