Epidermal fatty acid‐binding protein (E‐FABP/FABP5/DA11) binds and transport long‐chain fatty acids in the cytoplasm and may play a protecting role during neuronal injury. We examined whether E‐FABP protects nerve growth factor‐differentiated PC12 cells (NGFDPC12 cells) from lipotoxic injury observed after palmitic acid (C16:0; PAM) overload. NGFDPC12 cells cultures treated with PAM/bovine serum albumin at 0.3 mM/0.15 mM show PAM‐induced lipotoxicity (PAM‐LTx) and apoptosis. The apoptosis was preceded by a cellular accumulation of reactive oxygen species (ROS) and higher levels of E‐FABP. Antioxidants MCI‐186 and N‐acetyl cysteine prevented E‐FABP's induction in expression by PAM‐LTx, while tert‐butyl hydroperoxide increased ROS and E‐FABP expression. Non‐metabolized methyl ester of PAM, methyl palmitic acid (mPAM), failed to increase cellular ROS, E‐FABP gene expression, or trigger apoptosis. Treatment of NGFDPC12 cultures with siE‐FABP showed reduced E‐FABP levels correlating with higher accumulation of ROS and cell death after exposure to PAM. In contrast, increasing E‐FABP cellular levels by pre‐loading the cells with recombinant E‐FABP diminished the PAM‐induced ROS and cell death. Finally, agonists for PPARβ (GW0742) or PPARγ (GW1929) increased E‐FABP expression and enhanced the resistance of NGFDPC12 cells to PAM‐LTx. We conclude that E‐FABP protects NGFDPC12 cells from lipotoxic injury through mechanisms that involve reduction of ROS.