Like obesity, prolonged food deprivation induces severe hepatic steatosis; however, the functional significance of this phenomenon is not well understood. In this study, we show that the fall in plasma leptin concentration during fasting is required for the development of hepatic steatosis in mice. Removal of leptin receptors from AGRP neurons diminishes fasting-induced hepatic steatosis. Furthermore, the suppressive effects of leptin on fasting-induced hepatic steatosis are absent in mice lacking the gene encoding agouti-related protein (Agrp), suggesting that this function of leptin is mediated by AGRP. Prolonged fasting leads to suppression of hepatic sympathetic activity, increased expression of acyl CoA:diacylglycerol acyltransferase-2 in the liver, and elevation of hepatic triglyceride content and all of these effects are blunted in the absence of AGRP. AGRP deficiency, despite having no effects on feeding or body adiposity in the free-fed state, impairs triglyceride and ketone body release from the liver during prolonged fasting. Furthermore, reducing CNS Agrp expression in wild-type mice by RNAi protected against the development of hepatic steatosis not only during starvation, but also in response to consumption of a high-fat diet. These findings identify the leptin-AGRP circuit as a critical modulator of hepatic triglyceride stores in starvation and suggest a vital role for this circuit in sustaining the supply of energy from the liver to extrahepatic tissues during periods of prolonged food deprivation.