CARF (Collaborator of ARF), a member of ARF-MDM2-p53 pathway and an emerging multifunctional protein, regulates cellular fate in response to various stresses including oxidative DNA damage and replicative stresses. However, its role in metabolic syndrome (MS) and associated diseases has not been studied. This study, using our well established in vivo and in vitro model systems, examines the role of CARF in the development of non-alcoholic fatty liver disease (NAFLD). Indeed, we have found that, compared to control, CARF expression along with Sirt1, pAMPK and pACC (common biological markers of NAFLD) was significantly decreased in the nicotine and high-fat-diet (HFD) in combination or HFD alone induced fatty livers. Additionally, CARF expression was down regulated in palmitate (PA)-treated HepG2 cells, an in vitro model of steatosis, suggesting that CARF expression is negatively regulated in MS, such as NAFLD. Our study further revealed that shRNA mediated knockdown or lentiviral mediated over expression of CARF induced or reduced endogenous fat accumulation, respectively, in HepG2 cells. We also found that overexpression of CARF lowered the exogenous fat accumulation in PA treated HepG2 cells. RNA seq analysis after CARF knockdown in HEK-293T cells further revealed that genes associated with lipid metabolism and triglyceride (TG) synthesis such as diacylglycerol O-acyltransferase2 (DGAT2), acyl-CoA synthetase long-chain family member 4 and 6 (ACSL4, ACSL6) were upregulated in CARF-depleted cells. Likewise, we also found increased expression of DGAT2 in CARF-depleted HepG2 cells, which enhanced TG synthesis. Intriguingly, consistent with the lipid lowering effects of metformin, an antidiabetic drug, we further found that CARF expression along with pAMPK and Sirt1 were significantly increased in metformin-treated HepG2 cells. However, we also found increased pACC levels in CARF over-expressing cells which was further enhanced in metformin-treated cells, suggesting, for the first time, that CARF may contribute to lipid lowering effect of metformin by inhibiting lipogenesis. We conclude that CARF has a lipid lowering effect in hepatocytes and its down regulation in response to MS perturbs lipid metabolism that may lead to the development of NAFLD.