The HFE protein plays a crucial role in the control of cellular iron homeostasis. Steatosis is commonly observed in HFE-related iron-overload disorders, and current evidence suggests a causal link between iron and steatosis. Here, we investigated the potential contribution of HFE mutations to hepatic lipid metabolism and its role in the pathogenesis of nonalcoholic fatty liver disease. Wild-type (WT) and Hfe knockout mice (Hfe(-/-)) were fed either standard chow, a monounsaturated low fat, or a high-fat, high-carbohydrate diet (HFD) and assessed for liver injury, body iron status, and markers of lipid metabolism. Despite hepatic iron concentrations and body weights similar to WT controls, Hfe(-/-) mice fed the HFD developed severe hypoxia-related steatohepatitis, Tnf-α activation, and mitochondrial respiratory complex and antioxidant dysfunction with early fibrogenesis. These features were associated with an upregulation in the expression of genes involved in intracellular lipid synthesis and trafficking, while transcripts for mitochondrial fatty acid β-oxidation and adiponectin signaling-related genes were significantly attenuated. In contrast, HFD-fed WT mice developed bland steatosis only, with no inflammation or fibrosis and no upregulation of lipogenesis-related genes. A HFD led to reduced hepatic iron in Hfe(-/-) mice compared with chow-fed mice, despite higher serum iron, decreased hepcidin expression, and increased duodenal ferroportin mRNA. In conclusion, our results demonstrate that Hfe(-/-) mice show defective hepatic-intestinal iron and lipid signaling, which predispose them toward diet-induced hepatic lipotoxicity, accompanied by an accelerated progression of injury to fibrosis.