Hepatic inflammation is a common finding during a variety of liver diseases including drug-induced liver toxicity. The inflammatory phenotype can be attributed to the innate immune response generated by Kupffer cells, monocytes, neutrophils, and lymphocytes. The adaptive immune system is also influenced by the innate immune response leading to liver damage. This review summarizes recent advances in specific mechanisms of immune-mediated hepatotoxicity and its application to drug-induced liver injury. Basic mechanisms of activation of lymphocytes, macrophages, and neutrophils and their unique mechanisms of recruitment into the liver vasculature are discussed. In particular, the role of adhesion molecules and various inflammatory mediators in this process are explored. In addition, the authors describe mechanisms of liver cell damage by these inflammatory cells and critically evaluate the functional significance of each cell type for predictive and idiosyncratic drug-induced liver injury. It is expected that continued advances in our understanding of immune mechanisms of liver injury will lead to an earlier detection of the hepatotoxic potential of drugs under development and to an earlier identification of susceptible individuals at risk for predictive and idiosyncratic drug toxicities.