The mammalian carboxylesterase 1 (Ces1/CES1) family comprises several enzymes that hydrolyze many xenobiotic chemicals and endogenous lipids. To investigate the pharmacological and physiological roles of Ces1/CES1, we generated Ces1 cluster knockout (Ces1^–/–) mice, and a hepatic human CES1 transgenic model in the Ces1^–/– background (TgCES1). Ces1^–/– mice displayed profoundly decreased conversion of the anticancer prodrug irinotecan to SN-38 in plasma and tissues. TgCES1 mice exhibited enhanced metabolism of irinotecan to SN-38 in liver and kidney. Ces1 and hCES1 activity increased irinotecan toxicity, likely by enhancing the formation of pharmacodynamically active SN-38. Ces1^–/– mice also showed markedly increased capecitabine plasma exposure, which was moderately decreased in TgCES1 mice. Ces1^–/– mice were overweight with increased adipose tissue, white adipose tissue inflammation (in males), a higher lipid load in brown adipose tissue, and impaired blood glucose tolerance (in males). These phenotypes were mostly reversed in TgCES1 mice. TgCES1 mice displayed increased triglyceride secretion from liver to plasma, together with higher triglyceride levels in the male liver. These results indicate that the carboxylesterase 1 family plays essential roles in drug and lipid metabolism and detoxification. Ces1^–/– and TgCES1 mice will provide excellent tools for further study of the in vivo functions of Ces1/CES1 enzymes.