Alcoholic fatty liver (AFL) as well as non-alcoholic fatty liver (NAFL) are characterised by deposition of lipids into hepatocytes. The diagnosis of steatosis is made if lipid deposition exceeds 5 % of hepatocytes, in case of more than 50 % it is called "fatty liver". An additional inflammatory reaction, with ballooning of hepatocytes, leads to alcoholic steatohepatitis (ASH) or non-alcoholic steatohepatitis (NASH). Both ASH or NASH may lead to fibrosis or cirrhosis. To date in clinical practice it is not possible to differentiate between steatosis and steatohepatitis just on the basis of non-invasive tests. Steatohepatitis is present if, along with steatosis, both inflammatory infiltrates of mixed cells in the small liver lobules and liver cell injury in terms of ballooning can be detected. Liver biopsy represents the "gold standard" for confirming the diagnosis and to determine inflammatory activity and potential fibrosis of fatty liver disease. Indications for biopsy should take into account the possible information and its consequences as compared to expense and complication rate and therefore should be assessed in the clinical context.