The function of hydroxysteroid dehydrogenase 12 (HSD17B12) in lipid metabolism is poorly understood. To study this further, we created mice with hepatocyte-specific knockout of HSD17B12 (LiB12cKO). From 2 months on, these mice showed significant fat accumulation in their liver. As they aged, they also had a reduced whole-body fat percentage. Interestingly, the liver fat accumulation did not result in the typical formation of large lipid droplets (LD); instead, small droplets were more prevalent. Thus, LiB12KO liver did not show increased macrovesicular steatosis with the increasing fat content, while microvesicular steatosis was the predominant feature in the liver. This indicates a failure in the LD expansion. This was associated with liver damage, presumably due to lipotoxicity. Notably, the lipidomics data did not support an essential role of HSD17B12 in fatty acid (FA) elongation. However, we did observe a decrease in the quantity of specific lipid species that contain FAs with carbon chain lengths of 18 and 20 atoms, including oleic acid. Of these, phosphatidylcholine and phosphatidylethanolamine have been shown to play a key role in LD formation, and a limited amount of these lipids could be part of the mechanism leading to the dysfunction in LD expansion. The increase in the Cidec expression further supported the deficiency in LD expansion in the LiB12cKO liver. This protein is crucial for the fusion and growth of LDs, along with the downregulation of several members of the major urinary protein family of proteins, which have recently been shown to be altered during endoplasmic reticulum stress.