Metabolic dysfunction associated steatotic liver disease (MASLD) is a widespread liver disease that progresses from simple steatosis to severe steatohepatitis stage. Despite the recognized importance of carboxylesterase 2 (CES2) in hepatic lipid metabolism, the role of CES2 in hepatic inflammation remains unclear. The rat genome encodes six Ces2 genes and Ces2a shows high expression in liver and intestine. Lipid metabolism and inflammation, fibrosis, as well as endoplasmic reticulum (ER) stress were investigated in Ces2a knockout (KO) rats. KO rats showed spontaneous liver lipid accumulation due to increased lipogenesis and reduced fatty acid oxidation. Non-targeted lipidomic analysis revealed enhanced lysophosphatidylcholines (LPCs) and phosphatidylcholines (PCs) in KO rats and increased concentrations of ligands, thus activating the expression of PPARγ. Although there was simple lipid accumulation in the liver of KO rats, Ces2a deficiency showed a significant protective effect against LPS and diet induced hepatic steatohepatitis by inhibiting ER stress regulated by PPARγ activation. In line with this, treatment with tanshinone IIA, a CES2 inhibitor, significantly alleviated the progression of steatohepatitis induced by the MCD diet. In conclusion, the increased PPARγ expression in Ces2a deficiency may counteract liver inflammation and ER stress despite the presence of simple steatosis. Therefore, CES2 inhibition represents a potential therapeutic approach for steatohepatitis.