Nonalcoholic fatty liver disease (NAFLD) is characterized by abnormal lipid accumulation in the liver. Steatosis can induce lipotoxicity and subsequent development of nonalcoholic steatohepatitis (NASH), characterized not only by steatosis but also inflammation and fibrosis. The pathophysiology of NAFLD and NASH are complex, with the dysregulation of several hepatic lipid processes, and there is currently no FDA-approved pharmacotherapy. Given the central role of the mechanistic target of rapamycin complex 1 (mTORC1) in lipid homeostasis, mTORC1 has the potential to be a therapeutic target. However, how mTORC1 controls hepatic lipids remains incompletely understood, and multiple studies have yielded seemingly conflicting conclusions. Here, we reconcile these studies by showing that selective inhibition of one arm of mTORC1 signaling, via genetic deletion of the RagC/D GTPase-activating protein FLCN in the mouse liver, promotes activation of the transcription factor TFE3 without affecting other mTORC1 targets. Flcn deletion profoundly protects against NAFLD and NASH in mice, induced by multiple diets, and reverses these processes after they have been established. Mechanistically, disease protection is mediated via TFE3, which simultaneously induces lipid-clearance pathways (such as lysosomal biogenesis), promotes mitochondrial respiratory capacity, suppresses anabolic de novo lipogenesis (DNL). The latter is accomplished by suppressing proteolytic processing of SREBP-1c, the central driver of DNL, and by functional interaction with SREBP-1c on chromatin at DNL genes. Initial data show that Flcn deletion also activates VLDL-TAG secretion, suggesting the contribution of another lipid process for NAFLD/NASH protection. All together, our data illuminate previously conflicting studies, and highlight selective inhibition of mTORC1 via suppression of the FLCN:mTORC1:TFE3 axis as a potentially specific and coordinated therapeutic approach to treat NASH/NAFLD.