Here we show that Arg-II−/− mice exhibit significantly less hepatic steatosis with decreased triglyceride content, lower hepatic weight, reduced inflammatory cytokines and macrophage infiltration, which is accompanied by enhanced AMPK signaling and reduced expression/activity of hepatic lipogenic regulator and enzymes, including SREBP-1c, G6PDH, FAS and SCD-1, leading to mitigated de novo lipogenesis in the liver in vivo. Here, SCD is linked to fatty liver disease.