Nonalcoholic fatty liver disease is emerging as the most common liver disease in North America. The histological spectrum of nonalcoholic fatty liver disease ranges from fatty liver alone to steatohepatitis and to the most serious form--nonalcoholic steatohepatitis (NASH). An increasing body of evidence suggests that NASH is associated with the development of progressive fibrosis and eventually cirrhosis in approximately 20% of cases. These data emphasize the need to develop effective therapy for the treatment of NASH. Cases occur most commonly in obese middle age women with diabetes. However, NASH may also occur in children and normal weight men with normal glucose and lipid metabolism. The pathophysiology involves 2 steps. The first is insulin resistance, which causes steatosis. The second is oxidative stress, which produces lipid peroxidation and activates inflammatory cytokines resulting in NASH. Liver biopsy provides prognostic information and identifies NASH patients who may benefit from therapy. Treatment consists of managing the comorbidities: obesity, diabetes, and hyperlipidemia. Nascent clinical trials suggest that a number of therapies may be beneficial. These include anti-oxidants such as vitamin E and betaine, bile acid therapy with ursodeoxycholic acid, and improved insulin sensitivity with metformin. Another potential therapeutic strategy is the reduction of inflammatory cytokines.