Fasting causes lipolysis in adipose tissue leading to the release of large quantities of free fatty acids into circulation that reach the liver where they are metabolized to generate ketone bodies to serve as fuels for other tissues. Since fatty acid-metabolizing enzymes in the liver are transcriptionally regulated by peroxisome proliferator-activated receptor α (PPARα), we investigated the role of PPARα in the induction of these enzymes in response to fasting and their relationship to the development of hepatic steatosis in mice deficient in PPARα (PPARα^−/−), peroxisomal fatty acyl-CoA oxidase (AOX^−/−), and in both PPARα and AOX (double knock-out (DKO)). Fasting for 48–72 h caused profound impairment of fatty acid oxidation in both PPARα^−/− and DKO mice, and DKO mice revealed a greater degree of hepatic steatosis when compared with PPARα^−/− mice. The absence of PPARα in both PPARα^−/− and DKO mice impairs the induction of mitochondrial β-oxidation in liver following fasting which contributes to hypoketonemia and hepatic steatosis. Pronounced steatosis in DKO mouse livers is due to the added deficiency of peroxisomal β-oxidation system in these animals due to the absence of AOX. In mice deficient in AOX alone, the sustained hyperactivation of PPARα and up-regulation of mitochondrial β-oxidation and microsomal ω-oxidation systems as well as the regenerative nature of a majority of hepatocytes containing numerous spontaneously proliferated peroxisomes, which appear refractory to store triglycerides, blunt the steatotic response to fasting. Starvation for 72 h caused a decrease in PPARα hepatic mRNA levels in wild type mice, with no perceptible compensatory increases in PPARγ and PPARδ mRNA levels. PPARγ and PPARδ hepatic mRNA levels were lower in fed PPARα^−/− and DKO mice when compared with wild type mice, and fasting caused a slight increase only in PPARγ levels and a decrease in PPARδ levels. Fasting did not change the PPAR isoform levels in AOX^−/− mouse liver. These observations point to the critical importance of PPARα in the transcriptional regulatory responses to fasting and in determining the severity of hepatic steatosis.