Dipeptidyl peptidase-4 (DPP4), a well-known target of antidiabetic therapy, is implicated in steatotic liver disease. However, its role in hepatic lipid metabolism, particularly the distinct functions of soluble DPP4 (sDPP4) and membrane-bound DPP4 (mbDPP4), remains unclear. Here, we identify SOX2 as a key mediator linking sDPP4 to hepatocyte lipid accumulation, uncovering a previously unreported regulatory mechanism. sDPP4 promotes free fatty acid (FFA)-induced lipid accumulation and triglyceride (TG) synthesis in hepatocytes by upregulating SOX2, a stemness-associated transcription factor. SOX2 induction increased the expression of stearoyl-coenzyme A desaturase 1 (SCD1), a key lipogenic enzyme, supporting the role of SOX2-SCD1 signaling in sDPP4-mediated hepatic steatosis. SOX2 silencing abolished these effects, confirming its requirement for sDPP4-induced lipid accumulation. Similarly, mbDPP4 overexpression increased FFA-induced lipid synthesis and SOX2 expression, while its knockdown suppressed these responses. Pharmacological inhibition of mbDPP4 activity reduced lipid accumulation and downregulated SOX2, SCD1, and fatty acid synthase expression. However, exogenous sDPP4 reversed these effects, counteracting the lipid-suppressing effect of DPP4 inhibition. In vivo, high-fat diet (HFD)-fed mice exhibited increased plasma sDPP4 levels, whereas hepatic mbDPP4 expression remained unchanged. This correlated with enhanced hepatic SOX2 expression, suggesting that elevated sDPP4 may contribute to hepatic lipid accumulation independent of mbDPP4 activity. Collectively, our findings highlight the role of sDPP4-SOX2 signaling in hepatic lipid accumulation and underscore the need to distinguish sDPP4 from mbDPP4 in steatotic liver disease. Targeting the sDPP4-SOX2 axis could be explored as a potential therapeutic approach for steatotic liver disease.