Liver fatty acid binding protein (L-Fabp), a cytoplasmic protein expressed in liver and small intestine, regulates fatty acid (FA) trafficking in-vitro and plays an important role in diet-induced obesity. We observed that L-Fabp^-/- mice are protected against Western diet-induced obesity and hepatic steatosis. These findings are in conflict, however, with another report indicating that female L-Fabp^-/- mice manifest exaggerated obesity and increased hepatic steatosis when consuming a cholesterol-supplemented diet. In order to resolve this apparent paradox, we fed female L-Fabp^-/- mice two different cholesterol-supplemented low fat diets and discovered (on both diets) that they manifested lower body weight and similar or reduced hepatic triglyceride content compared to congenic wild-type C57BL/6J controls. We extended these comparisons to mice fed low cholesterol, high fat diets. Female L-Fabp^-/- mice fed a high saturated fat diet (SF) were dramatically protected against obesity and hepatic steatosis, while mice fed a high polyunsaturated fat diet (PUFA) manifested indistinguishable weight gain and hepatic lipid content to control mice. These findings demonstrate that L-Fabp functions as a metabolic sensor with a distinct hierarchy of FA sensitivity. We further conclude that cholesterol supplementation does not induce an obesity phenotype in L-Fabp^-/- mice, nor does it play a significant role in the protection against Western diet-induced obesity in this background.