Glucagon-mediated gene transcription in the liver is critical for maintaining glucose homeostasis. Promoting the induction of gluconeogenic genes and blocking that of insulin receptor substrate (Irs)2 in hepatocytes contributes to the pathogenesis of type 2 diabetes. However, the molecular mechanism by which glucagon signalling regulates hepatocyte metabolism is not fully understood. We previously showed that a fasting-inducible signalling module consisting of general control non-repressed protein 5, co-regulator cAMP response element-binding protein binding protein/p300-interacting transactivator with Glu/Asp-rich carboxy-terminal domain 2, and protein kinase A is required for glucagon-induced transcription of gluconeogenic genes. The present study aimed to identify the downstream effectors of this module in hepatocytes by examining glucagon-induced potential target genes. One of these genes was prolyl hydroxylase domain (PHD)3, which suppressed stress signalling through inhibition of the IκB kinase–nuclear factor-κB pathway in a proline hydroxylase-independent manner to maintain insulin signalling. PHD3 was also required for peroxisome proliferator–activated receptor γ coactivator 1α-induced gluconeogenesis, which was dependent on proline hydroxylase activity, suggesting that PHD3 regulates metabolism in response to glucagon as well as insulin. These findings demonstrate that glucagon-inducible PHD3 regulates glucose metabolism by suppressing stress signalling and optimising gluconeogenesis and insulin signalling in hepatocytes.