Murine hepatic carboxylesterase 2c (Ces2c) and the presumed human ortholog carboxylesterase 2 (CES2) have been implicated in the development of nonalcoholic fatty liver disease (NAFLD) in mice and obese humans. These studies demonstrated that Ces2c hydrolyzes triglycerides (TGs) in hepatocytes. Interestingly, Ces2c/CES2 is most abundantly expressed in the intestine, indicating a role of Ces2c/CES2 in intestinal TG metabolism. Here we show that Ces2c is an important enzyme in intestinal lipid metabolism in mice. Intestine-specific Ces2c overexpression (Ces2cint) provoked increased fatty acid oxidation (FAO) in the small intestine accompanied by enhanced chylomicron clearance from the circulation. As a consequence, high-fat diet-fed Ces2cint mice were resistant to excessive diet-induced weight gain and adipose tissue expansion. Notably, intestinal Ces2c overexpression increased hepatic insulin sensitivity and protected mice from NAFLD development. Although lipid absorption was not affected in Ces2cint mice, fecal energy content was significantly increased. Mechanistically, we demonstrate that Ces2c is a potent neutral lipase, which efficiently hydrolyzes TGs and diglycerides (DGs) in the small intestine, thereby generating fatty acids (FAs) for FAO and monoglycerides (MGs) and DGs for potential re-esterification. Consequently, the increased availability of MGs and DGs for re-esterification and primordial apolipoprotein B48 particle lipidation may increase chylomicron size, ultimately mediating more efficient chylomicron clearance from the circulation. Conclusion: This study suggests a critical role for Ces2c in intestinal lipid metabolism and highlights the importance of intestinal lipolysis to protect mice from the development of hepatic insulin resistance, NAFLD, and excessive diet-induced weight gain during metabolic stress.