The Forkhead box gene, group O (FoxO) family of Forkhead transcription factors is phopsphorylated and inactivated by the phosphatidylinositol 3-kinase (PI3K)/AKT pathway and regulates a variety of cellular functions. Hepatic stellate cells (HSCs) play a crucial role in liver fibrosis. A fibrotic stimulus causes HSCs to transdifferentiate from a quiescent phenotype to a collagen-producing myofibroblast-like phenotype and to proliferate.Mutation/deletion mutants of FoxO1 were introduced into primary rat, mouse, and immortalized human HSCs and assessed for activation, proliferation, and signal transduction. The role of FoxO1 in experimental liver fibrosis was assessed in FoxO1(+/-) and FoxO1(+/+) mice.Platelet-derived growth factor (PDGF) or insulin phosphorylates FoxO1 and induces FoxO1 translocation from the nuclei to the cytosol via the PI3K/AKT pathway in HSCs. Constitutively active FoxO1 inhibits proliferation via cell cycle arrest at the G1 phase, whereas dominant-negative FoxO1 enhances proliferation of HSCs even in the presence of the PI3K inhibitor LY294002. In addition, the phosphorylation of FoxO1 is increased during transdifferentiation of HSCs. The transdifferentiation is also inhibited by constitutively active FoxO1 and is accelerated by dominant-negative FoxO1. FoxO1 directly induces the expression of p27(kip1) and manganese superoxide dismutase (MnSOD). After bile duct ligation for 3 weeks, FoxO1(+/-) mice are more susceptible to liver fibrosis, consistent with our in vitro results.FoxO1 plays a crucial role in the transdifferentiation and proliferation of HSCs in liver fibrosis. Hyperinsulinemia inactivates FoxO1 in HSCs, resulting in HSC activation and may result in the fibrosis in nonalcoholic fatty liver disease.