Hepatic steatosis, the buildup of neutral lipids in lipid droplets (LDs), is commonly referred to as metabolic dysfunction-associated steatotic liver disease (MASLD) when alcohol or viral infections are not involved. MASLD encompasses simple steatosis and the more severe metabolic dysfunction-associated steatohepatitis (MASH), characterized by inflammation, hepatocyte injury, and fibrosis. Previously viewed as inert markers of disease, LDs are now understood to play active roles in disease etiology and have significant non-pathological and pathological functions in cell signaling and function. These dynamic properties of LDs are tightly regulated by hundreds of proteins that coat the LD surface, controlling lipid metabolism, trafficking, and signaling. The following review highlights various facets of LD biology with the primary goal of discussing key mechanisms through which LDs can promote the development of advanced liver diseases including MASH.