Proinflammatory hepatic macrophage activation plays a key role in the development of nonalcoholic steatohepatitis (NASH). This involves increased embryonic hepatic Kupffer cell (KC) death, facilitating the replacement of KCs with bone marrow-derived recruited hepatic macrophages (RHMs) that highly express proinflammatory genes. Moreover, phago/efferocytic activity of KCs is diminished in NASH, enhancing liver inflammation. However, the molecular mechanisms underlying these changes in KCs are not known. Here, we show that hypoxia-inducible factor 2α (HIF-2α) mediates NASH-associated decreased KC growth and efferocytosis by enhancing lysosomal stress. At the molecular level, HIF-2α stimulated mammalian target of rapamycin (mTOR)- and extracellular signal-regulated kinase-dependent inhibitory transcription factor EB (TFEB) phosphorylation, leading to decreased lysosomal and phagocytic gene expression. With increased metabolic stress and phago/efferocytic burden in NASH, these changes were sufficient to increase lysosomal stress, causing decreased efferocytosis and lysosomal cell death. Of interest, HIF-2α-dependent TFEB regulation only occurred in KCs but not RHMs. Instead, in RHMs, HIF-2α promoted mitochondrial reactive oxygen species production and proinflammatory activation by increasing ANT2 expression and mitochondrial permeability transition. Consequently, myeloid lineage-specific or KC-specific HIF-2α depletion or the inhibition of mTOR-dependent TFEB inhibition using antisense oligonucleotide treatment protected against the development of NASH in mice. Moreover, treatment with an HIF-2α-specific inhibitor reduced inflammatory and fibrogenic gene expression in human liver spheroids cultured under a NASH-like condition. Together, our results suggest that macrophage subtype-specific effects of HIF-2α collectively contribute to the proinflammatory activation of liver macrophages, leading to the development of NASH.