Fatty liver disease associated with chronic alcohol consumption or obesity/type 2 diabetes has emerged as a serious public health problem. Steatosis, accumulation of triglyceride in hepatocytes, is now recognized as a critical "first-hit" in the pathogenesis of liver disease. It is proposed that steatosis "primes" the liver to progress to more severe liver pathologies when individuals are exposed to subsequent metabolic and/or environmental stressors or "second-hits." Genetic risk factors can also influence the susceptibility to and severity of fatty liver disease. Furthermore, oxidative stress, disrupted nitric oxide (NO) signaling, and mitochondrial dysfunction are proposed to be key molecular events that accelerate or worsen steatosis and initiate progression to steatohepatitis and fibrosis. This review article will discuss the following topics regarding the pathobiology and molecular mechanisms responsible for fatty liver disease: (1) the "two-hit" or "multi-hit" hypothesis, (2) the role of mitochondrial bioenergetic defects and oxidant stress, (3) the interplay between NO and mitochondria in fatty liver disease, (4) genetic risk factors and oxidative stress-responsive genes, and (5) the feasibility of antioxidants for treatment.