Non-alcoholic fatty liver disease (NAFLD) is a common disorder in the Western hemisphere. It encompasses two histological lesions: fatty liver and steatohepatitis. A large body of literature indicates that insulin resistance is a key pathophysiological abnormality in patients with NAFLD. Insulin resistance results from a complex interplay between the major targets of insulin action, i.e. muscle, adipose tissue and liver, versus the ability of the pancreatic islet beta cells to compensate for insulin resistance by increasing insulin production. The metabolic and clinical profile associated with insulin resistance is thus defined by the factors that produce and maintain insulin resistance and the effects of decreased insulin sensitivity on various insulin-dependent pathways. The major metabolic defects associated with insulin resistance are increased peripheral lipolysis, increased hepatic glucose output due to increased gluconeogenesis and increased lipid oxidation. This is associated with an oxidative stress in the liver that may be compounded by additional pathophysiological abnormalities. While much work remains to be done, the current understanding of the pathogenesis of NAFLD provides direction for both future investigation and development of therapeutic trials.