Hepatic steatosis is characterized by the accumulation of lipid droplets in the liver. Although relatively benign, simple steatosis can eventually lead to the development of steatohepatitis, a more serious condition characterized by fibrosis, cirrhosis, and eventual liver failure if the underlying cause is not eliminated. According to the "two hit" theory of steatohepatitis, the initial hit involves fat accumulation in the liver, and a second hit leads to inflammation and subsequent tissue injury. Because some xenobiotics target liver fatty acid metabolism, especially mitochondrial β-oxidation, it is important to avoid potential drug candidates that can contribute to either the initiation of liver steatosis or progression to the more injurious steatohepatitis. The gold standard for the detection of these types of hepatic effects is histopathological examination of liver tissue. In animal studies, these examinations are slow, restricted to a single sampling time, and limited tissue sections. Recent literature suggests that rapid in vitro screening methods can be used early in the drug R&D process to identify compounds with steatotic potential. Further, progress in the identification of potential serum or plasma protein biomarkers for these liver changes may provide additional in vivo tools to the preclinical study toxicologist. This review summarizes recent developments for in vitro screening and in vivo biomarker detection for steatotic drug candidates. Copyright © 2010 Elsevier Ireland Ltd. All rights reserved.