Increased endoplasmic reticulum (ER) stress is one of the central mechanisms that lead to dysregulated metabolic homeostasis in obesity. It is thus crucial to understand the underpinnings of the mechanisms that lead to the development of ER stress. A high level of ER Ca(2+) is imperative for maintenance of normal ER function and this high Ca(2+) concentration of ER is maintained by sarco(endo)plasmic reticulum Ca(2+)-ATPase (SERCA). Here, we show that SERCA2b protein and mRNA levels are dramatically reduced in the liver of obese mice and restoration of SERCA2b in the liver of obese and diabetic mice alleviates ER stress, increases glucose tolerance, and significantly reduces the blood glucose levels. Furthermore, overexpression of SERCA2b in the liver of obese mice significantly reduces the lipogenic gene expression and the triglyceride content in the liver. Our results document the importance of SERCA2b in dysregulated glucose and lipid homeostasis in the liver of obese mice and suggest development of drugs to increase SERCA2b activity for treatment of type 2 diabetes and nonalcoholic steatohepatitis.