The present study was undertaken to investigate the possible protective effect of mitogen-activated protein kinase phosphatase 1 (Mkp-1) on toxin-induced hepatic injury. Here, we uncovered a positive feedback loop between Mkp-1, a dual threonine/tyrosine phosphatase, and nuclear factor erythroid 2-related factor 2 (Nrf2), a crucial regulator of the defense system in the liver. Mkp-1-/- mice exhibited decreased protein levels of Nrf2, phase II gene products, and reduced glutathione (GSH) in the liver. Induction of detoxifying enzymes by the Nrf2 activator butylated hydroxyanisole (BHA) or sulforaphane, was attenuated in the liver and small intestines of Mkp-1-/- mice, indicating that the Nrf2 signaling pathway is impaired as a result of Mkp-1 deficiency. Mkp-1-/- mice suffered more severe liver injury after a single exposure to hepatotoxin carbon tetrachloride (CCl4) than their wild-type (WT) counterparts. BHA partially rescued the CCl4-induced liver damage in WT mice, but not in Mkp-1-/- mice, suggesting the requirement of Mkp-1 in the activation of Nrf2 signaling against the liver injury. Mechanistically, Mkp-1 upregulated Nrf2 through a direct interaction with the Neh2 domain in the transcription factor, while Nrf2 enhanced the expression of Mkp-1 mRNA by binding to the ARE site at −1719 to −1710 bp in the Mkp-1 promoter. Our results reveal novel role of Mkp-1 in the maintenance of redox homeostasis in the liver. Thus, strategies aimed at augmenting Mkp-1 expression may be beneficial in protecting the liver and may provide novel therapeutic approaches to toxin-induced liver injury.