Nonalcoholic fatty liver disease (NAFLD) represents a burgeoning problem in hepatology, and is associated with insulin resistance. Exendin-4 is a peptide agonist of the glucagon-like peptide (GLP) receptor that promotes insulin secretion. The aim of this study was to determine whether administration of Exendin-4 would reverse hepatic steatosis in ob/ob mice. Ob/ob mice, or their lean littermates, were treated with Exendin-4 [10 microg/kg or 20 microg/kg] for 60 days. Serum was collected for measurement of insulin, adiponectin, fasting glucose, lipids, and aminotransferase concentrations. Liver tissue was procured for histological examination, real-time RT-PCR analysis and assay for oxidative stress. Rat hepatocytes were isolated and treated with GLP-1. Ob/ob mice sustained a reduction in the net weight gained during Exendin-4 treatment. Serum glucose and hepatic steatosis was significantly reduced in Exendin-4 treated ob/ob mice. Exendin-4 improved insulin sensitivity in ob/ob mice, as calculated by the homeostasis model assessment. The measurement of thiobarbituric reactive substances as a marker of oxidative stress was significantly reduced in ob/ob-treated mice with Exendin-4. Finally, GLP-1-treated hepatocytes resulted in a significant increase in cAMP production as well as reduction in mRNA expression of stearoyl-CoA desaturase 1 and genes associated with fatty acid synthesis; the converse was true for genes associated with fatty acid oxidation. In conclusion, Exendin-4 appears to effectively reverse hepatic steatosis in ob/ob mice by improving insulin sensitivity. Our data suggest that GLP-1 proteins in liver have a novel direct effect on hepatocyte fat metabolism.