Background & Aims Hypoxia-inducible factor 1α subunit (HIF1A) is a transcription factor that controls the cellular response to hypoxia and is activated in hepatocytes of patients with nonalcoholic fatty liver disease (NAFLD). NAFLD increases the risk for cholesterol gallstone disease by unclear mechanisms. We studied the relationship between HIF1A and gallstone formation associated with liver steatosis. Methods We performed studies with mice with inducible disruption of Hif1a in hepatocytes via a Cre adenoviral vector (inducible hepatocyte-selective HIF1A knockout [iH-HIFKO] mice), and mice without disruption of Hif1a (control mice). Mice were fed a diet rich in cholesterol and cholate for 1 or 2 weeks; gallbladders were collected and the number of gallstones was determined. Livers and biliary tissues were analyzed by histology, quantitative reverse-transcription polymerase chain reaction, immunohistochemistry, and immunoblots. We measured concentrations of bile acid, cholesterol, and phospholipid in bile and rates of bile flow. Primary hepatocytes and cholangiocytes were isolated and analyzed. HIF1A was knocked down in Hepa1-6 cells with small interfering RNAs. Liver biopsy samples from patients with NAFLD, with or without gallstones, were analyzed by quantitative reverse-transcription polymerase chain reaction. Results Control mice fed a diet rich in cholesterol and cholate developed liver steatosis with hypoxia; levels of HIF1A protein were increased in hepatocytes around central veins and 90% of mice developed cholesterol gallstones. Only 20% of the iH-HIFKO mice developed cholesterol gallstones. In iH-HIFKO mice, the biliary lipid concentration was reduced by 36%, compared with control mice, and bile flow was increased by 35%. We observed increased water secretion from hepatocytes into bile canaliculi to mediate these effects, resulting in suppression of cholelithogenesis. Hepatic expression of aquaporin 8 (AQP8) protein was 1.5-fold higher in iH-HIFKO mice than in control mice. Under hypoxic conditions, cultured hepatocytes increased expression of Hif1a, Hmox1, and Vegfa messenger RNAs (mRNAs), and down-regulated expression of AQP8 mRNA and protein; AQP8 down-regulation was not observed in cells with knockdown of HIF1A. iH-HIFKO mice had reduced inflammation and mucin deposition in the gallbladder compared with control mice. Liver tissues from patients with NAFLD with gallstones had increased levels of HIF1A, HMOX1, and VEGFA mRNAs, compared with livers from patients with NAFLD without gallstones. Conclusions In steatotic livers of mice, hypoxia up-regulates expression of HIF1A, which reduces expression of AQP8 and concentrates biliary lipids via suppression of water secretion from hepatocytes. This promotes cholesterol gallstone formation. Livers from patients with NAFLD and gallstones express higher levels of HIF1A than livers from patients with NAFLD without gallstones.