Fatty liver disease involves the accumulation of triglycerides in hepatocytes, necrosis of hepatocytes, inflammation, and often fibrosis with progression to cirrhosis. The two-hit model summarizes the important early metabolic events leading to hepatocellular necrosis in nonalcoholic steatohepatitis (NASH). In this article, we provide evidence of lipid release from hepatocytes in posttransplant fat necrosis and in NASH and quantify vascular obliteration in a series of biopsies with NASH. Obliteration of small hepatic veins (<30 microm) in small numbers is compensated by collateral flow. Obliteration of larger hepatic veins (>30 microm) is associated with fibrotic collapse lesions that are not easily resorbed. Based on these observations, we propose a new four-step model that includes the later events that lead to cirrhosis after necrosis has occurred. This model is applicable to nonalcoholic fatty liver disease (NAFLD), alcoholic disease, postjejunoileal bypass disease, and posttransplant fat necrosis. The first step is steatosis facilitated by insulin, and the second is necrosis induced by intracellular lipid toxicity or lipid peroxidation, or both, modified by alcohol, drugs, and ischemia. The third step is release of bulk lipid from hepatocytes into the interstitium leading to direct and inflammatory injury to hepatic veins. The fourth step is venous obstruction with secondary collapse and ultimately fibrous septation and cirrhosis.