Insulin-induced gene (Insig) negatively regulates SREBP-mediated de novo fatty acid synthesis in the liver. However, the upstream regulation of Insig is incompletely understood. Here we report that AMPK interacts with and mediates phosphorylation of Insig. Thr222 phosphorylation following AMPK activation is required for protein stabilization of Insig-1, inhibition of cleavage and processing of SREBP-1, and lipogenic gene expression in response to metformin or A769662. AMPK-dependent phosphorylation ablates Insig’s interaction with E3 ubiquitin ligase gp78 and represses its ubiquitination and degradation, whereas AMPK deficiency shows opposite effects. Interestingly, activation of AMPK by metformin causes an augmentation of Insig stability and reduction of lipogenic gene expression, and leads to the attenuation of hepatic steatosis in HFHS diet-fed mice. Moreover, hepatic overexpression of Insig-1 rescues hepatic steatosis in liver-specific AMPKα2 knockout mice fed with HFHS diet. These findings uncover a novel effector of AMPK. Targeting Insig may have the therapeutic potential for treating fatty liver disease and related disorders.