Although the role of Wnt/beta-catenin signaling in liver growth and development is well established, its contribution in non-neoplastic hepatic pathologies has not been investigated. Here, we examine the role of beta-catenin in a murine model of diet-induced liver injury. Mice with hepatocyte-specific beta-catenin deletion (KO) and littermate controls were fed the steatogenic methionine and choline-deficient (MCD) diet or the corresponding control diet for 2 weeks and characterized for histological, biochemical, and molecular changes. KO mice developed significantly higher steatohepatitis and fibrosis on the MCD diet compared with wild-type mice. Both wild-type and KO livers accumulated triglyceride on the MCD diet but, unexpectedly, higher hepatic cholesterol levels were observed in KO livers on both control and MCD diets. Gene expression analysis showed that hepatic cholesterol accumulation in KO livers was not attributable to increased synthesis or uptake. KO mice had lower expression of bile acid synthetic enzymes but exhibited higher hepatic bile acid and serum bilirubin levels, suggesting defects in bile export. Therefore, loss of beta-catenin in the liver leads to defective cholesterol and bile acid metabolism in the liver and increased susceptibility to developing steatohepatitis in the face of metabolic stress.