The liver plays a crucial role in mobilizing energy during nutritional deprivation. During the early stages of fasting, hepatic glycogenolysis is a primary energy source. As fasting progresses and glycogen stores are depleted, hepatic gluconeogenesis and ketogenesis become major energy sources. Here, we show that fibroblast growth factor 21 (FGF21), a hormone that is induced in liver by fasting, induces hepatic expression of peroxisome proliferator-activated receptor gamma coactivator protein-1alpha (PGC-1alpha), a key transcriptional regulator of energy homeostasis, and causes corresponding increases in fatty acid oxidation, tricarboxylic acid cycle flux, and gluconeogenesis without increasing glycogenolysis. Mice lacking FGF21 fail to fully induce PGC-1alpha expression in response to a prolonged fast and have impaired gluconeogenesis and ketogenesis. These results reveal an unexpected relationship between FGF21 and PGC-1alpha and demonstrate an important role for FGF21 in coordinately regulating carbohydrate and fatty acid metabolism during the progression from fasting to starvation.