Lipid droplet accumulation and oxidant stress, once thought to play essential roles in the pathogenesis of nonalcoholic steatohepatitis (NASH), may actually represent parallel epiphenomena. Emerging data now point to nontriglyceride lipotoxicity and complex mechanisms of hepatocyte injury and apoptosis as the major contributors to the disease phenotype currently recognized as NASH. Although specific mediators of hepatic lipotoxicity have not been identified with certainty, abundant evidence from animal studies and recent data in humans indicate that free fatty acids in the liver can serve as substrates for formation of nontriglyceride lipotoxic metabolites that cause liver injury. The accumulation of triglyceride in droplets may actually be protective, and thus therapeutic efforts directed at fat accumulation as a sole endpoint may be misguided. This review examines the new evidence supporting the role of nontriglyceride fatty acid metabolites in causing NASH and how adipose and muscle insulin resistance contribute to hepatic lipotoxicity.