The activity of proteinase is reported to correlate with the development and progression of nonalcoholic fatty liver disease (NAFLD). Puromycin-sensitive aminopeptidase (PSA/NPEPPS) is an integral nontransmembrane enzyme that functions to catalyze the cleavage of amino acids near the N-terminus of polypeptides. A previous study suggested that this enzyme acts as a regulator of neuropeptide activity; however, the metabolic function of this enzyme in the liver has not been explored. Here, we identified the novel role of PSA in hepatic lipid metabolism. Specifically, PSA expression was lower in fatty livers from NAFLD patients and mice (HFD, ob/ob, and db/db). PSA knockdown in cultured hepatocytes exacerbated diet-induced triglyceride accumulation through enhanced lipogenesis and attenuated fatty acid β-oxidation. Moreover, PSA mediated activation of the master regulator of antioxidant response, nuclear factor erythroid 2-related factor 2 (NRF2), by stabilizing NRF2 protein expression, which further induced downstream antioxidant enzymes to protect the liver from oxidative stress and lipid overload. Accordingly, liver-specific PSA overexpression attenuated hepatic lipid accumulation and steatosis in ob/ob mice. Furthermore, in human liver tissue samples, decreased PSA expression correlated with the progression of NAFLD. Overall, our findings suggest that PSA is a pivotal regulator of hepatic lipid metabolism and its antioxidant function occurs by suppressing NRF2 ubiquitination. Moreover, PSA may be a potential biomarker and therapeutic target for treating NAFLD.