Non-alcoholic fatty liver disease is a major cause of chronic liver pathology in humans. Fatty liver disease involves the accumulation of hepatocellular fat in hepatocytes that can progress to hepatitis. Steatohepatitis is categorized into alcoholic (ASH) or non-alcoholic (NASH) steatohepatitis based on the etiology of the insult. Both pathologies involve an initial steatosis followed by a progressive inflammation of the liver and eventual hepatic fibrosis (steatohepatitis) and cirrhosis. The involvement of pharmaceuticals and other chemicals in the initiation and progression of fatty liver disease has received increased study. This review will examine not only how xenobiotics initiate hepatic steatosis and steatohepatitis but also how the presence of fatty liver may modify the metabolism and pathologic effects of xenobiotics. The feeding of a high fat diet results in changes in the expression of nuclear receptors that are involved in adaptive and adverse liver effects following xenobiotic exposure. High fat diets also modulate cellular and molecular pathways involved in inflammation, metabolism, oxidative phosphorylation and cell growth. Understanding the role of hepatic steatosis and steatohepatitis on the sequelae of toxic and pathologic changes seen following xenobiotic exposure has importance in defining proper and meaningful human risk characterization of the drugs and other chemical agents.