Nonalcoholic fatty liver disease (NAFLD), the hepatic manifestation of the metabolic syndrome, has emerged as one of the most common causes of chronic liver disease in developed countries over the last decade. NAFLD comprises a spectrum of pathological hepatic changes, including steatosis, steatohepatitis, advanced fibrosis, and cirrhosis. Autophagy, a homeostatic process for protein and organelle turnover, is decreased in the liver during the development of NAFLD. Previously, we have shown that carbon monoxide (CO), a reaction product of heme oxygenase (HO) activity, can confer protection in NAFLD, though the molecular mechanisms remain unclear. We therefore investigated the mechanisms underlying the protective effect of CO on methionine/choline-deficient (MCD) diet-induced hepatic steatosis. We found that CO induced sestrin-2 (SESN2) expression through enhanced mitochondrial ROS production and protected against MCD-induced NAFLD progression through activation of autophagy. SESN2 expression was increased by CO or CO-releasing molecule (CORM2), in a manner dependent on signaling through the protein kinase R-like endoplasmic reticulum kinase (PERK), eukaryotic initiation factor-2 alpha (eIF2α)/ activating transcription factor-4 (ATF4)-dependent pathway. CO-induced SESN2 upregulation in hepatocytes contributed to autophagy induction through activation of 5’-AMP-activated protein kinase (AMPK) and inhibition of mechanistic target of rapamycin (mTOR) complex I (mTORC1). Furthermore, we demonstrate that CO significantly induced the expression of SESN2 and enhanced autophagy in the livers of MCD-fed mice or in MCD-media treated hepatocytes. Conversely, knockdown of SESN2 abrogated autophagy activation and mTOR inhibition in response to CO. We conclude that CO ameliorates hepatic steatosis through the autophagy pathway induced by SESN2 upregulation.