Metabolism is a highly integrated process that is coordinately regulated between tissues and within individual cells. FoxO proteins are major targets of insulin action and contribute to the regulation of gluconeogenesis, glycolysis, and lipogenesis in the liver. However, the mechanisms by which FoxO proteins exert these diverse effects in an integrated fashion remain poorly understood. We report that FoxO proteins also exert important effects on intrahepatic lipolysis and fatty acid oxidation via the regulation of adipose triacylglycerol lipase (ATGL), which mediates the first step in lipolysis, and its inhibitor, the G0/S1 switch 2 gene (G0S2). We also find that ATGL-dependent lipolysis plays a critical role in mediating diverse effects of FoxO proteins in the liver, including effects on gluconeogenic, glycolytic, and lipogenic gene expression and metabolism. These results indicate that intrahepatic lipolysis plays a critical role in mediating and integrating the regulation of glucose and lipid metabolism downstream of FoxO proteins.