The prevalence of nonalcoholic fatty liver disease (NAFLD) increases with increasing body mass index (BMI). However, approximately 40-50% of obese adults do not develop hepatic steatosis. The level of inflammatory biomarkers is higher in obese subjects with NAFLD compared to BMI-matched subjects without hepatic steatosis. We used a casein injection in high-fat diet (HFD)-fed C57BL/6J mice to induce inflammatory stress. Although mice on a HFD exhibited apparent phenotypes of obesity and hyperlipidemia regardless of exposure to casein injection, only the HFD+Casein mice showed increased hepatic vacuolar degeneration accompanied with elevated inflammatory cytokines in the liver and serum, compared to mice on a normal chow diet. The expression of genes related to hepatic fatty acid synthesis and oxidation were upregulated in the HFD-only mice. The casein injection further increased baseline levels of lipogenic genes and decreased the levels of oxidative genes in HFD-only mice. Inflammatory stress induced both oxidative stress and endoplasmic reticulum stress in HFD-fed mice livers. We conclude that chronic inflammation precedes hepatic steatosis by disrupting the balance between fatty acid synthesis and oxidation in the livers of HFD-fed obese mice. This mechanism may operate in obese individuals with chronic inflammation, thus making them more prone to NAFLD.