Background: Previous works indicated that the stress on the endoplasmic reticulum (ER) affected nonalcoholic fatty liver disease (NAFLD). However, there is no clear evident on the effect of the regulation of ER stress by angiotensin-converting enzyme 2 (ACE2) on the prevention of NAFLD. Methods: HepG2 cells were treated with thapsigargin (Tg) or palmitic acid (PA). We analysed ACE2 expression using Western-blotting analyses. ER stress-related proteins were detected in ACE2 knockout mice and Ad-ACE2-treated db/db mice by immunofluorescence or Western-blotting analyses. In ACE2-overexpression HepG2 cells, the triglyceride (TG), total cholesterol (TC), and glycogen content were detected by assay kits. Meanwhile, the expression of hepatic lipogenic proteins (ACCa, SREBP-1c, FAS, and LXRa), enzymes for gluconeogenesis (PEPCK, G6Pase, and IRS2), and IKK beta/NF kappa B/IRS1/Akt pathway were analysed by Western-blotting analyses. Results: ACE2 was significantly increased in Tg/PA-induced cultured hepatocytes. Additionally, ACE2 knockout mice displayed elevated levels of ER stress, while Ad-ACE2-treated db/db mice showed reduced ER stress in liver. Furthermore, activation of ACE2 can ameliorate ER stress, accompanied by decreased TG content, increased intracellular glycogen, and downregulated expression of hepatic lipogenic proteins and enzymes for gluconeogenesis in Tg/PA-induced hepatocytes. As a consequence of anti-ER stress, the activation of ACE2 led to improved glucose and lipid metabolism through the IKK beta/NF kappa B/IRS1/Akt pathway. Conclusions: This is the first time documented that ACE2 had a notable alleviating role in ER stress-induced hepatic steatosis and glucose metabolism via the IKK beta/NF kappa B/IRS1/Akt-mediated pathway. This study may further provide insight into a novel underlying mechanism and a strategy for treating NAFLD.