The incidence of obesity is now at epidemic proportions and has resulted in the emergence of nonalcoholic fatty liver disease (NAFLD) as a common metabolic disorder that can lead to liver injury and cirrhosis. Excess sucrose and long-chain saturated fatty acids in the diet may play a role in the development and progression of NAFLD. One factor linking sucrose and saturated fatty acids to liver damage is dysfunction of the endoplasmic reticulum (ER). Although there is currently no proven, effective therapy for NAFLD, the amino sulfonic acid taurine is protective against various metabolic disturbances, including alcohol-induced liver damage. The present study was undertaken to evaluate the therapeutic potential of taurine to serve as a preventative treatment for diet-induced NAFLD. We report that taurine significantly mitigated palmitate-mediated caspase-3 activity, cell death, ER stress, and oxidative stress in H4IIE liver cells and primary hepatocytes. In rats fed a high-sucrose diet, dietary taurine supplementation significantly reduced hepatic lipid accumulation, liver injury, inflammation, plasma triglycerides, and insulin levels. The high-sucrose diet resulted in an induction of multiple components of the unfolded protein response in the liver consistent with ER stress, which was ameliorated by taurine supplementation. Treatment of mice with the ER stress-inducing agent tunicamycin resulted in liver injury, unfolded protein response induction, and hepatic lipid accumulation that was significantly ameliorated by dietary supplementation with taurine. Our results indicate that dietary supplementation with taurine offers significant potential as a preventative treatment for NAFLD.