We previously demonstrated that hepatic activation of a small G protein of the Ras family, Rap1a, is suppressed in obesity, which results in increased hepatic glucose production and glucose intolerance in obese mice. Here, we show that Rap1a inhibition in obese mice liver also results in fatty liver formation, which is characteristic of the diabetic liver. Specifically, we report that Rap1a activity is decreased in the livers of patients with non-alcoholic steatohepatitis (NASH) and mouse models of non-alcoholic fatty liver disease (NAFLD) and NASH. Restoring hepatic Rap1a activity by overexpressing a constitutively active mutant form of Rap1a lowered the mature, processed form of lipogenic transcription factor, Srebp1, without an effect on the unprocessed Srebp1 and suppressed hepatic TG accumulation, whereas liver Rap1a deficiency increased Srebp1 processing and exacerbated steatosis. Mechanistically, we show that mTORC1, which promotes Srebp1 cleavage, is hyperactivated upon Rap1a deficiency despite disturbed insulin signaling. In proof-of-principle studies, we found that treatment of obese mice with a small molecule activator of Rap1a (8-pCPT) or inhibiting Rap1a's endogenous inhibitor, Rap1Gap, recapitulated our hepatic gain-of-function model and resulted in improved hepatic steatosis and lowered lipogenic genes. Thus, hepatic Rap1a serves as a signaling molecule that suppresses both hepatic gluconeogenesis and steatosis, and inhibition of its activity in the liver contributes to the pathogenesis of glucose intolerance and NAFLD/NASH development.