The conjugation of neural precursor cell expressed, developmentally downregulated 8 (NEDD8) to target proteins, termed neddylation, participates in many cellular processes and is aberrant in various pathological diseases. Its relevance to liver function and failure remains poorly understood. Herein, we show dysregulated expression of NAE1, a regulatory subunit of the only NEDD8 E1 enzyme, in human acute liver failure. Embryonic- and adult-onset deletion of NAE1 in hepatocytes causes hepatocyte death, inflammation, and fibrosis, culminating in fatal liver injury in mice. Hepatic neddylation deficiency triggers oxidative stress, mitochondrial dysfunction, and hepatocyte reprogramming, potentiating liver injury. Importantly, NF-κB-inducing kinase (NIK), a serine/Thr kinase, is a neddylation substrate. Neddylation of NIK promotes its ubiquitination and degradation. Inhibition of neddylation conversely causes aberrant NIK activation, accentuating hepatocyte damage and inflammation. Administration of N-acetylcysteine, a glutathione surrogate and antioxidant, mitigates liver failure caused by hepatic NAE1 deletion in adult male mice. Therefore, hepatic neddylation is important in maintaining postnatal and adult liver homeostasis, and the identified neddylation targets/pathways provide insights into therapeutically intervening acute liver failure.