Aldose reductase (AR) is implicated in the development of a number of diabetic complications, but the underlying mechanisms remain to be fully elucidated. We performed this study to determine whether and how AR might influence hepatic peroxisome proliferator-activated receptor alpha (PPARalpha) activity and lipid metabolism. Our results in mouse hepatocyte AML12 cells show that AR overexpression caused strong suppression of PPARalpha/delta activity (74%, p < 0.001) together with significant down-regulation of mRNA expression for acetyl-CoA oxidase and carnitine palmitoyltransferase-1. These suppressive effects were attenuated by the selective AR inhibitor zopolrestat. Furthermore, AR overexpression greatly increased the levels of phosphorylated PPARalpha and ERK1/2. Moreover, AR-induced suppression of PPARalpha activity was attenuated by treatment with an inhibitor for ERK1/2 but not that for phosphoinositide 3-kinase, p38, or JNK. Importantly, similar effects were observed for cells exposed to 25 mm glucose. In streptozotocin-diabetic mice, AR inhibitor treatment or genetic deficiency of AR resulted in significant dephosphorylation of both PPARalpha and ERK1/2. With the dephosphorylation of PPARalpha, hepatic acetyl-CoA oxidase and apolipoprotein C-III mRNA expression was greatly affected and that was associated with substantial reductions in blood triglyceride and nonesterified fatty acid levels. These data indicate that AR plays an important role in the regulation of hepatic PPARalpha phosphorylation and activity and lipid homeostasis. A significant portion of the AR-induced modulation is achieved through ERK1/2 signaling.