Nonalcoholic fatty liver disease (NAFLD) is characterized by hepatic lipid deposition and coincides often with cardiometabolic diseases. Several dietary factors attenuate NAFLD. Here, we report beneficial effects of chronic dietary capsaicin intake on NAFLD which is mediated by the transient receptor potential vanilloid 1 (TRPV1) activation. The results showed that TRPV1 activation by capsaicin reduced free fatty acids (FFAs) induced the intracellular lipid droplets in HepG2 cells and prevented fatty liver in vivo. Chronic dietary capsaicin promoted lipolysis by increasing hepatic phosphorylated hormone-sensitive lipase (phospho-HSL), carnitine palmitoyltransferase 1 (CPT1), and peroxisome proliferator-activated receptor δ (PPARδ) in wild-type (WT) mice. This effect was absent in TRPV1^−/− mice. Dietary capsaicin did not affect lipogenesis, as indicated by the detection of hepatic fatty acid synthase (FAS), sterol regulatory element-binding protein-1 (SREBP-1), PPARα, and liver X receptor (LXR) in mice. Importantly, TRPV1 causes PPARδ activation which significantly increased the expression of autophagy-related proteins, such as light chain 3 (LC3)II, Beclin1, Atg5, and Atg7 in HepG2 cells. In the in vivo study, TRPV1 activation by dietary capsaicin enhanced hepatic PPARδ and autophagy-related proteins and reduced hepatic enzymes and inflammatory factor in WT but not TRPV1^−/− mice. TRPV1 activation by dietary capsaicin prevents NAFLD through PPARδ-dependent autophagy enhancement in mice. Dietary capsaicin may represent a beneficial intervention in populations at high risk for NAFLD.