The development of insulin resistance is tightly linked to fatty liver disease and is considered a major health concern worldwide, although their mechanistic relationship remains controversial. Activin has emerging roles in nutrient homeostasis, but its metabolic effects on hepatocytes remain unknown. In this study, we investigated the effects of increased endogenous activin bioactivity on hepatic nutrient homeostasis by creating mice with inactivating mutations that deplete the circulating activin antagonists follistatin-like-3 (FSTL3) or the follistatin 315 isoform (FST315; FST288-only mice). We investigated liver histology and lipid content, hepatic insulin sensitivity, and metabolic gene expression including the HepG2 cell and primary hepatocyte response to activin treatment. Both FSTL3-knockout and FST288-only mice had extensive hepatic steatosis and elevated hepatic triglyceride content. Unexpectedly, insulin signaling, as assessed by phospho-Akt (a.k.a. protein kinase B), was enhanced in both mouse models. Pretreatment of HepG2 cells with activin A increased their response to subsequent insulin challenge. Gene expression analysis suggests that increased lipid uptake, enhanced de novo lipid synthesis, decreased lipolysis, and/or enhanced glucose uptake contribute to increased hepatic triglyceride content in these models. However, activin treatment recapitulated only some of these gene changes, suggesting that increased activin bioactivity may be only partially responsible for this phenotype. Nevertheless, our results indicate that activin enhances hepatocyte insulin response, which ultimately leads to hepatic steatosis despite the increased insulin sensitivity. Thus, regulation of activin bioactivity is critical for maintaining normal liver lipid homeostasis and response to insulin, whereas activin agonists may be useful for increasing liver insulin sensitivity.