Insulin resistance leads to hypertriglyceridemia and hepatic steatosis and is associated with increased SREBP-1c, a transcription factor that activates fatty acid synthesis. Here, we show that steatosis in insulin-resistant ob/ob mice was abolished by deletion of Scap, an escort protein necessary for generating nuclear isoforms of all three SREBPs. Scap deletion reduced lipid synthesis and prevented fatty livers despite persistent obesity, hyperinsulinemia, and hyperglycemia. Scap deficiency also prevented steatosis in mice fed high-fat diets. Steatosis was also prevented when siRNAs were used to silence Scap in livers of sucrose-fed hamsters, a model of diet-induced steatosis and hypertriglyceridemia. This silencing reduced all three nuclear SREBPs, decreasing lipid biosynthesis and abolishing sucrose-induced hypertriglyceridemia. These results demonstrate that SREBP activation is essential for development of diabetic hepatic steatosis and carbohydrate-induced hypertriglyceridemia, but not insulin resistance. Inhibition of SREBP activation has therapeutic potential for treatment of hypertriglyceridemia and fatty liver disease.