YPEL5 is a member of the Yippee-like (YPEL) gene family that is evolutionarily conserved in eukaryotic species. To date, the physiological function of YPEL5 has not been assessed due to a paucity of genetic animal models. Here, using CRISPR/Cas9-mediated genome editing, we generated a stable ypel5−/− mutant zebrafish line. Disruption of ypel5 expression leads to liver enlargement associated with hepatic cell proliferation. Meanwhile, hepatic metabolism and function are dysregulated in ypel5−/− mutant zebrafish, as revealed by metabolomic and transcriptomic analyses. Mechanistically, Hnf4a is identified as a crucial downstream mediator that is positively regulated by Ypel5. Zebrafish hnf4a overexpression could largely rescue ypel5 deficiency-induced hepatic defects. Furthermore, PPARα signaling mediates the regulation of Hnf4a by Ypel5 through directly binding to the transcriptional enhancer of the Hnf4a gene. Herein, this work demonstrates an essential role of Ypel5 in hepatocyte proliferation and function and provides the first in vivo evidence for a physiological role of the ypel5 gene in vertebrates.