Metabolic associated fatty liver disease (MAFLD) is fundamentally driven by an imbalance in hepatic fatty-acid flux: the influx of fatty acids exceeds the liver's capacity for disposal, resulting in excessive hepatic lipid accumulation, predominantly triglycerides (TGs). The occurrence and progression of MAFLD depend on disordered regulation across multiple metabolic steps, including fatty-acid uptake, de novo lipogenesis (DNL), fatty-acid oxidation (FAO), and very-low-density lipoprotein (VLDL) export. Forkhead box protein O1 (FOXO1) is a key transcriptional regulator within the hepatic network coordinating glucose and lipid metabolism. Under metabolic stress and insulin resistance (IR), FOXO1 expression is frequently increased, whereas its inhibitory phosphorylation is reduced. These changes enhance FOXO1 nuclear localization and transcriptional activity, thereby reprogramming the expression of genes related to metabolism in the liver. Because hepatic lipid deposition is the central pathological feature of MAFLD, the functional status of FOXO1 directly influences hepatic lipid homeostasis. Growing evidence suggests that FOXO1 can exert bidirectional, environment-dependent effects on hepatic lipid accumulation; however, the molecular basis for this functional switch remains incompletely understood. This review systematically summarizes the biological functions and regulatory mechanisms of FOXO1 and its roles in hepatic lipid metabolism, with a particular focus on its crosstalk with insulin signaling. FOXO1 expression is shaped by RNA modifications and epigenetic regulation mediated by non-coding RNAs. Its transcriptional output is precisely governed by post-translational modifications—such as phosphorylation and acetylation—as well as by coordinated nucleocytoplasmic shuttling. Notably, these regulatory patterns vary markedly across nutritional states, degrees of insulin resistance, and stages of disease. In the fed state, insulin/IGF-1 signaling activates the PI3K–AKT pathway, promoting inhibitory phosphorylation of FOXO1 and facilitating additional modifications, including acetylation, methylation, and ubiquitination. Together, these events drive FOXO1 export from the nucleus and dampen its transcriptional activity, suppressing gluconeogenesis and constraining lipogenic programs. Conversely, during fasting or when insulin signaling is weakened, FOXO1 inhibition is relieved. FOXO1 accumulates in the nucleus, binds DNA, and regulates the transcription of downstream target genes. Mechanistically, FOXO1 can aggravate hepatic lipid accumulation by activating genes involved in TG synthesis while repressing FAO-related pathways, thereby favoring storage over oxidation. However, under specific conditions, FOXO1 may also alleviate hepatic lipid burden by promoting TG hydrolysis and enhancing VLDL secretion, reducing net hepatic lipid load. In addition, lipotoxic signals mediated by ceramides and diacylglycerols (Cer/DAG) activate atypical protein kinase C (aPKC), further exacerbating disruption of the AKT–FOXO1 axis. This vicious cycle ultimately produces a metabolic paradox in which increased hepatic glucose output coexists with persistent, insulin-dependent lipogenesis, accelerating MAFLD progression. Importantly, FOXO1 regulation is not uniform: during early metabolic overload, insulin-mediated suppression may remain effective, whereas in advanced insulin resistance, loss of AKT control permits sustained FOXO1 activity. Such stage-dependent dynamics may help explain why FOXO1 can either promote steatosis or, in certain contexts, support programs that facilitate lipid turnover. Accordingly, interventions should be liver-specific and tuned to disease stage, aiming to curb maladaptive FOXO1 signaling while preserving its capacity to promote triglyceride hydrolysis and VLDL secretion when advantageous. Overall, this review offers an important perspective on MAFLD pathogenesis, emphasizing FOXO1 as a potential therapeutic target and providing a theoretical basis for developing liver-specific, disease-course–dependent precision interventions.