Nonalcoholic fatty liver disease (NAFLD) is characterized by a wide spectrum of liver damage spanning steatosis, nonalcoholic steatohepatitis (NASH), cryptogenic liver cirrhosis, and even to hepatocellular carcinoma. Investigations in the last few years have focused on NASH, a relatively aggressive form of liver disease, due largely to the explosion of information provided by clinical and basic science studies related to the widespread presence of risk factors, such as obesity, type II diabetes mellitus, and dyslipidemia. This is especially important given that obesity and type II diabetes mellitus have recently reached epidemic proportions in Korea. The pathogenesis of NASH is multifactorial, with insulin resistance and increased fatty acid possibly being important factors in the accumulation of hepatocellular fat, and oxidant stress, lipid peroxidation, mitochondrial dysfunction, and dysregulation of variable cytokines possibly being important causes of hepatocellular injury in steatotic liver. Because not all steatotic livers progress to NASH, some other environmental factors or a combination of genetic factors are thought to be required for progression to NASH and fibrosis. Lifestyle modifications continue to be the cornerstone therapy in NAFLD, but some insulin-sensitizing drugs might be more effective in treating NASH. Many pilot trials for antioxidants and lipid-lowering and hepatic protective agents have yielded promising initial results in improving liver enzymes or features of liver histology. However, the efficacy of these agents remains questionable. Despite recent gains in understanding NASH, several issues related to its natural history, pathogenesis, and treatment remain unresolved.