Liver is a key organ involved in the regulation of both systemic as well as local inflammatory responses. Hepatic inflammation is the hallmark of viral hepatitis caused by non-cytopathic Hepatitis B and C viruses (HBV and HCV). Both HBV and HCV induce several inflammatory responses, causing persistent liver injury, which manifests into progressive diseased state. This ultimately leads to fibrosis, cirrhosis and eventually hepatocellular carcinoma. The disease progression is mediated by a complex interplay of molecular pathways involving both viral and hepatic factors. The complex cellular crosstalk, involving pro-inflammatory cytokines, during the liver injury also causes extra hepatic disorders such as artherosclerosis, glomerulonephritis, arthritis, cardio vascular and brain disease. In addition, these viral infections have been reported to contribute to non-Hodgkin lymphoma, cholangio carcinoma and pancreatic cancer. Host genetics also play an important role in the HBV/HCV mediated viral hepatitis and the accumulation of mutations in the host genes responsible for mounting antiviral effects (cytokines and interferon receptors) has been shown to produce differential immune responses among individuals and increase susceptibility to chronic infections. Viral proteins are known to modulate the host immune response by a variety of mechanisms such as by exerting direct or indirect effects on the cytokine pathways, oxidative stress, miRNAs and other cellular processes. However, the complete network of cytokines involved in the disease pathogenesis is yet not fully understood. This review analyzes the interplay of inflammatory molecules and viral proteins, the impact of local and systemic inflammation during HBV and HCV infection and the contribution of host genetics to such responses.