In vitro studies suggest that the mitochondrial glycerol-3-phosphate acyltransferase-1 (mtGPAT1) isoform catalyzes the initial and rate-controlling step in glycerolipid synthesis and aids in partitioning acyl-CoAs toward triacylglycerol synthesis and away from degradative pathways. To determine whether the absence of mtGPAT1 would increase oxidation of acyl-CoAs and restrict the development of hepatic steatosis, we fed wild type and mtGPAT1-/- mice a diet high in fat and sucrose (HH) for 4 months to induce the development of obesity and a fatty liver. Control mice were fed a diet low in fat and sucrose (LL). With the HH diet, absence of mtGPAT1 resulted in increased partitioning of acyl-CoAs toward oxidative pathways, demonstrated by 60% lower hepatic triacylglycerol content and 2-fold increases in plasma beta-hydroxybutyrate, acylcarnitines, and hepatic mRNA expression of mitochondrial HMG-CoA synthase. Despite the increase in fatty acid oxidation, liver acyl-CoA levels were 3-fold higher in the mtGPAT1-/- mice fed both diets. A lack of difference in CPT1 and FAS mRNA expression between genotypes suggested that the increased acyl-CoA content was not because of increased de novo synthesis, but instead, to an impaired ability to use long-chain acyl-CoAs derived from the diet, even when the dietary fat content was low. Hyperinsulinemia and reduced glucose tolerance on the HH diet was greater in the mtGPAT1-/- mice, which did not suppress the expression of the gluconeogenic genes glucose-6-phosphatase and phosphoenolpyruvate carboxykinase. This study demonstrates that mtGPAT1 is essential for normal acyl-CoA metabolism, and that the absence of hepatic mtGPAT1 results in the partitioning of fatty acids away from triacylglycerol synthesis and toward oxidation and ketogenesis.