Dietary fat and oxidative stress are hypothesized to contribute to non-alcoholic fatty liver disease and progression to steatohepatitis. To determine the effects of dietary fat content on hepatic triglyceride, body fat distribution and markers of inflammation and oxidative stress, overweight/obese subjects with normal glucose tolerance consumed a control diet (CONT: 35% fat/12% saturated fat/47% carbohydrate) for ten days, followed by four weeks on a low fat (LFD (n = 10): 20% fat/8% saturated fat/62% carbohydrate) or high fat diet (HFD (n = 10): 55% fat/25% saturated fat/27% carbohydrate). Hepatic triglyceride content was quantified by MRS and abdominal fat distribution by MRI. Fasting biomarkers of inflammation (plasma hsCRP, IL-6, IL-12, TNFα, IFN-γ) and oxidative stress (urinary F2-α isoprostanes) were measured. Body weight remained stable. Compared to the CONT, hepatic triglyceride decreased on the LFD (mean (95% CI): change -2.13% (-3.74%, -0.52%)), but did not change on the HFD and there was no significant difference between the LFD and HFD. Intra-abdominal fat did not change significantly on either diet, but subcutaneous abdominal fat increased on the HFD. There were no significant changes in fasting metabolic markers, inflammatory markers and urinary F2-α isoprostanes. We conclude that in otherwise healthy overweight/obese adults under weight-neutral conditions, a diet low in fat and saturated fat has modest effects to decrease liver fat and may be beneficial. On the other hand, a diet very high in fat and saturated fat had no effect on hepatic triglyceride or markers of metabolism, inflammation and oxidative stress.