Obesity is a major contributing factor for metabolic-associated fatty liver disease (MAFLD). Fibroblast growth factor (FGF) 1 is the first paracrine FGF family member identified to exhibit promising metabolic regulatory properties capable of conferring glucose-lowering and insulin-sensitizing effect. This study explores the role and molecular underpinnings of FGF1 in obesity-associated hepatic steatosis. In a mouse high-fat diet (HFD)-induced MAFLD model, chronic treatment with recombinant FGF1(rFGF1) was found to effectively reduce the severity of insulin resistance, hyperlipidemia, and inflammation. FGF1 treatment decreased lipid accumulation in the mouse liver and palmitic acid-treated AML12 cells. These effects were associated with decreased mature form SREBF1 expression and its target genes FASN and SCD1. Interestingly, we uncovered that rFGF1 significantly induced IGFBP2 expression at both mRNA and protein levels in HFD-fed mouse livers and cultured hepatocytes treated with palmitic acid. Adeno-associated virus-mediated IGFBP2 suppression significantly diminished the therapeutic benefit of rFGF1 on MAFLD-associated phenotypes, indicating that IGFBP2 plays a crucial role in the FGF1-mediated reduction of hepatic steatosis. Further analysis revealed that rFGF1 treatment reduces the recruitment of DNA methyltransferase 3 alpha to the IGFBP2 genomic locus, leading to decreased IGFBP2 gene methylation and increased mRNA and protein expression. Collectively, our findings reveal FGF1 modulation of lipid metabolism via epigenetic regulation of IGFBP2 expression, and unravel the therapeutic potential of the FGF1-IGFBP2 axis in metabolic diseases associated with obesity.