While non-alcoholic fatty liver disease (NAFLD) is highly prevalent (15% to 45%) in modern societies, only 10% to 25% of cases develop hepatic fibrosis leading to cirrhosis, end-stage liver disease or hepatocellular carcinoma. Apart from pre-existing fibrosis, the strongest predictor of fibrotic progression in NAFLD is steatohepatitis or non-alcoholic steatohepatitis (NASH). The critical features other than steatosis are hepatocellular degeneration (ballooning, Mallory hyaline) and mixed inflammatory cell infiltration. While much is understood about the relationship of steatosis to metabolic factors (over-nutrition, insulin resistance, hyperglycemia, metabolic syndrome, hypoadiponectinemia), less is known about inflammatory recruitment, despite its importance for the perpetuation of liver injury and fibrogenesis. In this review, we present evidence that liver inflammation has prognostic significance in NAFLD. We then consider the origins and components of liver inflammation in NASH. Hepatocytes injured by toxic lipid molecules (lipotoxicity) play a central role in the recruitment of innate immunity involving Toll-like receptors (TLRs), Kupffer cells (KCs), lymphocytes and neutrophils and possibly inflammasome. The key pro-inflammatory signaling pathways in NASH are nuclear factor-kappa B (NF-κB) and c-Jun N-terminal kinase (JNK). The downstream effectors include adhesion molecules, chemokines, cytokines and the activation of cell death pathways leading to apoptosis. The upstream activators of NF-κB and JNK are more contentious and may depend on the experimental model used. TLRs are strong contenders. It remains possible that inflammation in NASH originates outside the liver and in the gut microbiota that prime KC/TLR responses, inflamed adipose tissue and circulating inflammatory cells. We briefly review these mechanistic considerations and project their implications for the effective treatment of NASH.