PKCλ is implicated as a downstream effector of PI3K in insulin action. We show here that mice that lack PKCλ specifically in the liver (L-λKO mice), produced with the use of the Cre-loxP system, exhibit increased insulin sensitivity as well as a decreased triglyceride content and reduced expression of the sterol regulatory element–binding protein-1c (SREBP-1c) gene in the liver. Induction of the hepatic expression of Srebp1c and of its target genes involved in fatty acid/triglyceride synthesis by fasting and refeeding or by hepatic expression of an active form of PI3K was inhibited in L-λKO mice compared with that in control animals. Expression of Srebp1c induced by insulin or by active PI3K in primary cultured rat hepatocytes was inhibited by a dominant-negative form of PKCλ and was mimicked by overexpression of WT PKCλ. Restoration of PKCλ expression in the liver of L-λKO mice with the use of adenovirus-mediated gene transfer corrected the metabolic abnormalities of these animals. Hepatic PKCλ is thus a determinant of hepatic lipid content and whole-body insulin sensitivity.