Nonalcoholic fatty liver disease (NAFLD) is currently the most common form of chronic liver disease affecting both adults and children in the USA and many other parts of the world. NAFLD encompasses a wide spectrum of conditions associated with the overaccumulation of lipids in the liver, ranging from steatosis to nonalcoholic steatohepatitis, to cirrhosis and its feared complications of portal hypertension, liver failure and hepatocellular carcinoma. In this article, we will focus on the growing evidence linking changes in hepatic lipid metabolism and accumulation of specific lipid types in the liver with hepatocellular damage, inflammation and apoptosis, resulting in disease progression to the more serious forms of this condition.