Obesity and diabetes normally cause mitochondrial dysfunction and hepatic lipid accumulation, while fatty acid synthesis is suppressed and malonyl-CoA is depleted in the liver of severe obese or diabetic animals. Therefore, a negative regulatory mechanism might work for the control of mitochondrial fatty acid metabolism that is independent of malonyl-CoA in the diabetic animals. As mitochondrial β-oxidation is controlled by the acetyl-CoA/CoA ratio, and the acetyl-CoA generated in peroxisomal β-oxidation could be transported into mitochondria via carnitine shuttles, we hypothesize that peroxisomal β-oxidation might play a role in regulating mitochondrial fatty acid oxidation and inducing hepatic steatosis under the condition of obesity or diabetes. This study reveals a novel mechanism by which peroxisomal β-oxidation controls mitochondrial fatty acid oxidation in diabetic animals. We determined that excessive oxidation of fatty acids by peroxisomes generates considerable acetyl-carnitine in the liver of diabetic mice, which significantly elevates the mitochondrial acetyl-CoA/CoA ratio and causes feedback suppression of mitochondrial β-oxidation. Additionally, we found that specific suppression of peroxisomal β-oxidation enhances mitochondrial fatty acid oxidation by reducing acetyl-carnitine formation in the liver of obese mice. In conclusion, we suggest that induction of peroxisomal fatty acid oxidation serves as a mechanism for diabetes-induced hepatic lipid accumulation. Targeting peroxisomal β-oxidation might be a promising pathway in improving hepatic steatosis and insulin resistance as induced by obesity or diabetes.