Fatty liver disease (FLD), whether it is alcoholic FLD (AFLD) or nonalcoholic FLD (NAFLD), encompasses a morphological spectrum consisting of hepatic steatosis (fatty liver) and steatohepatitis. FLD has the inherent propensity to progress toward the development of cirrhosis and hepatocellular carcinoma. It is generally difficult to distinguish AFLD from NAFLD on morphological grounds alone despite the distinctions implied by these etiological designations. The indistinguishable spectrum of histological features of both AFLD and NAFLD suggests a possible convergence of pathogenetic mechanisms at some critical juncture that enables the progression of steatohepatitis toward cirrhosis and liver cancer. From a pathogenetic perspective, FLD may be considered a single disease with multiple etiologies. Excess energy consumption and reduced energy combustion appear to be critical events that culminate in lipid storage in the liver. Energy combustion in the liver is controlled by peroxisome proliferator-activated receptor (PPAR)-alpha-regulated mitochondrial and peroxisomal fatty acid beta-oxidation systems and the microsomal omega-oxidation system. PPAR-alpha, a receptor for peroxisome proliferators, functions as a sensor for fatty acids (lipid sensor), and ineffective PPAR-alpha sensing can lead to reduced energy burning resulting in hepatic steatosis and steatohepatitis. Delineation of the pathogenetic aspects of FLD is necessary for developing novel therapeutic strategies for this disease.