Ceramides contribute to the lipotoxicity that underlies diabetes, hepatic steatosis, and heart disease. By genetically engineering mice, we deleted the enzyme dihydroceramide desaturase 1 (DES1), which normally inserts a conserved double bond into the backbone of ceramides and other predominant sphingolipids. Ablation of DES1 from whole animals or tissue-specific deletion in the liver and/or adipose tissue resolved hepatic steatosis and insulin resistance in mice caused by leptin deficiency or obesogenic diets. Mechanistic studies revealed ceramide actions that promoted lipid uptake and storage and impaired glucose utilization, none of which could be recapitulated by (dihydro)ceramides that lacked the critical double bond. These studies suggest that inhibition of DES1 may provide a means of treating hepatic steatosis and metabolic disorders.