The transition from compensated to decompensated cirrhosis results from a complex interplay of predisposing and precipitating factors and represents an inflection point in the probability of a patient surviving. With the progression of cirrhosis, patients accumulate multiple disorders (e.g. altered liver architecture, portal hypertension, local and systemic inflammation, bacterial translocation, gut dysbiosis, kidney vasoconstriction) that predispose them to decompensation. On the background of these factors, precipitating events (e.g. bacterial infection, alcoholic hepatitis, variceal haemorrhage, drug-induced liver injury, flare of liver disease) lead to acute decompensation (ascites, hepatic encephalopathy, variceal bleeding, jaundice) and/or organ failures, which characterise acute-on-chronic liver failure. In this review paper, we will discuss the current hypotheses and latest evidences regarding predisposing and precipitating factors associated with the transition to decompensated liver disease.