Dietary lipids and increased de novo lipogenesis drive lipid droplet accumulation. A deficiency in PC and accumulation of phospholipids with poor surfactant properties result in unstable LDs with packing defects. These defects promote spontaneous LD coalescence and formation of giant LDs. Such aberrant LDs recruit non-LD proteins, including Golgi apparatus components, disrupting essential cellular processes, such as lipoprotein secretion. This exacerbates steatosis, activates stress pathways, impairs hepatocyte identity and function, and contributes to cell death. Stressed and dying hepatocytes release damage-associated molecular patterns and other signals that recruit lipid-associated macrophages and activate immune cells and hepatic stellate cells, leading to inflammation, fibrosis, and potentially cirrhosis or hepatocellular carcinoma. Genetic variants in LD-associated proteins (e.g., PNPLA3, HSD17B13, and CIDEB) can either promote (red) or protect (blue) against hepatocyte lipid accumulation, thereby influencing the risk and progression of different stages of liver disease. LD, lipid droplet; TG, triglycerides; PC, phosphatidylcholine; RE, retinyl ester; ECM, extracellular matrix; DAMPS, damage-associated molecular patterns; LAM, lipid associated macrophages.