Nonalcoholic fatty liver disease (NAFLD) is the most common chronic liver disorder. It is uncertain if simple steatosis, the initial and prevailing form of NAFLD, sensitizes the liver to cholestasis. Here, we compared the effects of obstructive cholestasis in rats with a normal liver versus rats with simple steatosis induced by a methionine/choline-deficient diet. We found that plasma liver enzymes were higher and hepatic neutrophil influx, inflammation, and fibrosis were more pronounced in animals with combined steatosis and cholestasis compared to cholestasis alone. Circulating bile salt levels were markedly increased and hepatic bile salt composition shifted from hydrophilic tauro-β-muricholate to hydrophobic taurocholate. This shift was cytotoxic for HepG2 hepatoma cells. Gene expression analysis revealed induction of the rate-limiting enzyme in bile salt synthesis, cytochrome P450 7a1 (CYP7A1), and modulation of the hepatic bile salt transport system. In conclusion, simple steatosis sensitizes the liver to cholestatic injury, inflammation, and fibrosis in part due to a cytotoxic shift in bile salt composition. Plasma bile salt levels were elevated, linked to dysregulation of bile salt synthesis and enhanced trafficking of bile salts from the liver to the systemic circulation.