Impaired motor function, due to the dysfunction of the basal ganglia, is the most common syndrome of hepatic encephalopathy (HE), and its etiology remains poorly understood. Neural oxidative stress is shown to be the major cellular defects contributing to HE pathogenesis. Mitochondrial uncoupling protein 2 (UCP2) has been implicated in neuroprotection in several neurological disorders. We explored the neuroprotective role of UCP2 within the substantia nigra pars reticulate (SNr), the output structure of the basal ganglia, in HE. The toxin thioacetamide (TAA) induced HE mice showed hypolocomotion, which was associated with decreased ATP levels and loss of antioxidant substances SOD and GSH within the SNr. Stable overexpression of UCP2 via AAV-UCP2 under the control of the UCP2 promoter in bilateral SNr preserved local ATP level, increased antioxidant substances, and ameliorated locomotion defects after severe liver failure. Contrary to UCP2 overexpression, targeted knockdown of UCP2 within bilateral SNr via AAV-UCP2 shRNA exacerbated the impaired mitochondrial dysfunction and hypokinesia in HE mice. The modulatory effects of UCP2 was due to mediation of K+-Cl− cotransporter-2 (KCC2) expression on GABAergic neurons of SNr. Taken together, our results demonstrate that UCP2 exerts a neural protective role at the subcortical level by increasing the resistance of neurons to oxidative stress, which may offer a novel therapeutic target for the treatment of motor dysfunction diseases.