Nonalcoholic fatty liver disease (NAFLD) is an increasingly recognized cause of liver-related morbidity and mortality. It can develop secondary to numerous causes but a great majority of NAFLD cases occur in patients who are obese or present with other components of metabolic syndrome (hypertension, dyslipidemia, diabetes). This is called primary NAFLD and insulin resistance plays a key role in its pathogenesis. Obesity is characterized by expanded adipose tissue, which is under a state of chronic inflammation. This disturbs the normal storage and endocrine functions of adipose tissue. In obesity, the secretome (adipokines, cytokines, free fatty acids and other lipid moieties) of fatty tissue is amplified, which through its autocrine, paracrine actions in fat tissue and systemic effects especially in the liver leads to an altered metabolic state with insulin resistance (IR). IR leads to hyperglycemia and reactive hyperinsulinemia, which stimulates lipid-accumulating processes and impairs hepatic lipid metabolism. IR enhances free fatty acid delivery to liver from the adipose tissue storage due to uninhibited lipolysis. These changes result in hepatic abnormal fat accumulation, which may initiate the hepatic IR and further aggravate the altered metabolic state of whole body. Hepatic steatosis can also be explained by the fact that there is enhanced dietary fat delivery and physical inactivity. IR and NAFLD are also seen in various lipodystrophic states in contrary to popular belief that these problems only occur due to excessive adiposity in obesity. Hence, altered physiology of adipose tissue is central to development of IR, metabolic syndrome and NAFLD.