Nonalcoholic fatty liver disease (NAFLD) is the most common liver abnormality in the United States and is strongly associated with the metabolic syndrome. Although many of the risk factors are well defined, the pathogenesis of NAFLD remains poorly understood. Recent studies have implicated several important cellular processes and signaling pathways that are affected by abnormal lipid metabolism, resulting in specific biochemical, histological, and clinical changes associated with NAFLD. Pharmacotherapy for NAFLD is limited and treatments are mainly to minimize risk factors. Understanding the disease pathogenesis is therefore important in identifying individuals with increased susceptibility for disease progression so lifestyle and risk modifications can be initiated early on. In this review, recent advances in the study of abnormal lipid metabolism and its impacts on histology and dysregulation of various cellular processes implicated in the genesis of NAFLD will be discussed.