Nonalcoholic fatty liver disease (NAFLD) is a rising chronic liver disease and comprises a spectrum from simple steatosis to nonalcoholic steatohepatitis (NASH) to end-stage cirrhosis and risk of hepatocellular carcinoma (HCC). The pathogenesis of NAFLD is multifactorial, but inflammation is considered the key element of disease progression. The liver harbors an abundance of resident immune cells, that in concert with recruited immune cells, orchestrate steatohepatitis. While inflammatory processes drive fibrosis and disease progression in NASH, fueling the ground for HCC development, immunity also exerts antitumor activities. Furthermore, immunotherapy is a promising new treatment of HCC, warranting a more detailed understanding of inflammatory mechanisms underlying the progression of NASH and transition to HCC. Novel methodologies such as single-cell sequencing, genetic fate mapping, and intravital microscopy have unraveled complex mechanisms behind immune-mediated liver injury. In this review, we highlight some of the emerging paradigms, including macrophage heterogeneity, contributions of nonclassical immune cells, the role of the adaptive immune system, interorgan crosstalk with adipose tissue and gut microbiota. Furthermore, we summarize recent advances in preclinical and clinical studies aimed at modulating the inflammatory cascade and discuss how these novel therapeutic avenues may help in preventing or combating NAFLD-associated HCC.