The prevalence of nonalcoholic fatty liver disease (NAFLD) and nonalcoholic steatohepatitis (NASH) is rising worldwide with the increasing incidence of obesity, Type 2 diabetes mellitus and metabolic syndrome. NASH is currently one of the most common indications of liver transplantation in the United States. The immune system plays a major role in the pathogenesis of NAFLD/NASH. The metabolic changes, associated with obesity and metabolic syndrome, induce immunological responses resulting in NAFLD and further aggravation of the metabolic derangement in a feed-forward loop. Genetic and endocrine factors modulate the immunological and metabolic responses and determine the pathophysiological features of NAFLD. Histologically, NAFLD is a spectrum that ranges from simple hepatic steatosis to severe steatohepatitis, liver cirrhosis and/or hepatocellular carcinoma. Liver cirrhosis and hepatocellular carcinoma are responsible for the morbidity and mortality of the disease. This article is a critical evaluation of our current knowledge of the immunological and molecular basis of the disease.