Phosphatidylethanolamine (PE) is an important inner membrane phospholipid mostly synthesized de novo via the PE-Kennedy pathway and by the decarboxylation of phosphatidylserine. CTP:phosphoethanolamine cytidylyltransferase (Pcyt2) catalyzes the formation of CDP-ethanolamine, which is often the rate regulatory step in the PE-Kennedy pathway. In the current investigation, we show that the reduced CDP-ethanolamine formation in Pcyt2(+/-) mice limits the rate of PE synthesis and increases the availability of diacylglycerol. This results in the increased formation of triglycerides, which is facilitated by stimulated de novo fatty acid synthesis and increased uptake of pre-existing fatty acids. Pcyt2(+/-) mice progressively accumulate more diacylglycerol and triglycerides with age and have modified fatty acid composition, predominantly in PE and triglycerides. Pcyt2(+/-) additionally have an inherent blockage in fatty acid utilization as energy substrate and develop impaired tolerance to glucose and insulin at an older age. Accordingly, gene expression analyses demonstrated the up-regulation of the main lipogenic genes and down-regulation of mitochondrial fatty acid beta-oxidation genes. These data demonstrate for the first time that to preserve membrane PE phospholipids, Pcyt2 deficiency generates compensatory changes in triglyceride and energy substrate metabolism, resulting in a progressive development of liver steatosis, hypertriglyceridemia, obesity, and insulin resistance, the main features of the metabolic syndrome.