Although the mammalian IRE1α-XBP1 branch of the cellular unfolded protein response has been implicated in glucose and lipid metabolism, the exact metabolic role of IRE1α signalling in vivo remains poorly understood. Here we show that hepatic IRE1α functions as a nutrient sensor that regulates the metabolic adaptation to fasting. We find that prolonged deprivation of food or consumption of a ketogenic diet activates the IRE1α-XBP1 pathway in mouse livers. Hepatocyte-specific abrogation of Ire1α results in impairment of fatty acid β-oxidation and ketogenesis in the liver under chronic fasting or ketogenic conditions, leading to hepatosteatosis; liver-specific restoration of XBP1s reverses the defects in IRE1α null mice. XBP1s directly binds to and activates the promoter of PPARα, the master regulator of starvation responses. Hence, our results demonstrate that hepatic IRE1α promotes the adaptive shift of fuel utilization during starvation by stimulating mitochondrial β-oxidation and ketogenesis through the XBP1s–PPARα axis.