NAFLD, regarded as the hepatic manifestation of metabolic syndrome, is the most common form of liver disease in the United States. The Odd-skipped related 1 (Osr1) gene was previously reported to play a critical role in embryonic development and as a cancer repressor gene, however its role in overnutrition induced fatty liver disease has never been explored. Induced by a high-fat diet (HFD) for 10-week, the development and the progression of NAFLD was evaluated in either Osr1 heterozygote (Osr1 group) or wildtype mice (WT group). The Osr1 mice, regardless of sex, exhibited more severe steatosis compared to WT. Upregulation of lipogenesis protein including Srebp1c was detected in the Osr1 group, together with impaired IRS2 expression and overactivated Akt/mTOR signaling. In addition, the Osr1 mice had decreased bile acid synthesis in the liver with depressed hepatic expression of Cyp7a1 and Cyp27a1. Furthermore, there was more macrophage infiltration with enhanced expression of Il-1β and TNF-α in the Osr1 liver, associated with overactivation of JNK and NF-κB signaling. In summary, our study showed that Osr1 plays an important role in regulating the lipid homeostasis and hepatic inflammation, whose disruption contributes to NAFLD progression.