The prevailing theory in non-alcoholic fatty liver disease (NAFLD) is the "two-hit" hypothesis. The first hit mainly consists of lipid accumulation, and the second is subsequent systemic inflammation. The current study was undertaken to investigate whether inflammatory stress exacerbates lipid accumulation in liver and its underlying mechanisms. We used interleukin-1beta (IL-1beta) and tumor necrosis factor alpha (TNF-alpha) stimulation in human hepatoblastoma cell line (HepG2) cells and primary hepatocytes in vitro, and casein injection in apolipoprotein E knockout mice in vivo to induce inflammatory stress. The effects of inflammatory stress on cholesterol accumulation were examined by histochemical staining and a quantitative intracellular cholesterol assay. The gene and protein expressions of molecules involved in cholesterol trafficking were examined by real-time polymerase chain reaction (PCR) and western blot. Cytokine production in the plasma of apolipoprotein E knockout mice was measured by enzyme-linked immunosorbent assay. Our results showed that inflammatory stress increased cholesterol accumulation in hepatic cells and in the livers of apolipoprotein E knockout mice. Further analysis showed that inflammatory stress increased the expression of low-density lipoprotein (LDL) receptor (LDLr), sterol regulatory element-binding protein (SREBP) cleavage activating protein (SCAP), and SREBP-2. Confocal microscopy showed that IL-1beta increased the translocation of SCAP/SREBP-2 complex from endoplasmic reticulum (ER) to Golgi in HepG2 cells, thereby activating LDLr gene transcription. IL-1beta, TNF-alpha, and systemic inflammation induced by casein injection also inhibited expression of adenosine triphosphate-binding cassette transporter A1 (ABCA1), peroxisome proliferator-activated receptor-alpha (PPAR-alpha), and liver X receptor-alpha (LXRalpha). This inhibitory effect may cause cholesterol efflux reduction. Inflammatory stress up-regulates LDLr-mediated cholesterol influx and down-regulates ABCA1-mediated cholesterol efflux in vivo and in vitro. This may exacerbate the progression of NAFLD by disrupting cholesterol trafficking control, especially during the second hit phase of liver damage.