Serum albumin facilitates the transport of free fatty acids (FFAs) from adipose tissue to other organs. It was not known if impeding this process could protect from hepatic steatosis and metabolic dysfunction in obesity. We tested whether albumin knockout (Alb−/−) mice would exhibit a reduction in plasma FFA concentration, reduced hepatic lipid accumulation, and improved glucoregulation as compared to wild-type (WT) mice. Male homozygous albumin knockout mice (Alb−/−) and WT controls were fed a low-fat diet (LFD) or high-fat diet (HFD). Alb−/−mice exhibited a similar body weight gain and body composition as WT on both diets. Despite HFD-induced obesity, Alb−/−mice were protected from various comorbidities. Compared to WT mice on the HFD, Alb−/−exhibited lower plasma FFA levels, lower blood glucose levels during glucose tolerance and insulin tolerance tests, and lower hepatic steatosis and inflammation. Alb−/−mice on HFD also exhibited elevated expression of multiple genes in the liver and adipose tissues, such as peroxisome proliferator-activated receptor α in both tissues, as well as glucose transporter-4 and adiponectin in adipose tissues. The results indicate that albumin’s FFA transport function may be involved in the development of hepatic lipid accumulation and dysregulated glucose metabolism in obesity.