Liver disease is a leading cause of mortality worldwide. Emerging evidence highlights the significant role of epigenetic regulation in sustaining liver homeostasis, providing new therapeutic strategies for liver disease. Hepatocyte-specific deletion of the epigenetic regulator KANSL3, a key component of the NSL complex, results in early-onset liver disease marked by biliary hyperplasia and hepatic fibrosis. KANSL3 is essential for regulating hepatocyte transcriptional networks important for hepatic steroid and lipid metabolism through histone acetylation. Moreover, single-cell RNA sequencing demonstrated that the loss of KANSL3 disrupts the differentiation of hepatocytes in vivo. The transcriptional programs necessary for hepatocyte differentiation of ductal and fetal liver organoids were severely compromised in the absence of KANSL3. These findings collectively demonstrate a crucial role of the epigenetic regulator KANSL3 in hepatocyte differentiation in liver development and disease.