Non-alcoholic steatohepatitis (NASH), a cause of cirrhosis and hepatocellular carcinoma, is characterized by fatty infiltration of the liver, inflammation, hepatocellular damage and fibrosis. Progress has been made in understanding the molecular and cellular mechanisms implicated in the pathogenesis of this condition, therefore, we here review recent developments regarding the basic mechanisms of NASH development. Accumulation of triglycerides in the hepatocytes is the result of increased inflow of free fatty acids and de novo lipogenesis. Steatosis leads to lipotoxicity, which causes apoptosis, necrosis, generation of oxidative stress and inflammation. The resulting chronic injury activates a fibrogenic response that leads eventually to end-stage liver disease. A better understanding of these mechanisms is crucial for the design of novel diagnostic and therapeutic strategies.