Nonalcoholic fatty liver disease (NAFLD) refers to a spectrum of liver damage ranging from simple steatosis to nonalcoholic steatohepatitis (NASH), advanced fibrosis and cirrhosis. NAFLD is considered the hepatic component of the metabolic syndrome and insulin resistance represents its pathophysiological hallmark. Insulin resistance in NAFLD is characterized by reduced whole-body, hepatic, and adipose tissue insulin sensitivity. The mechanism(s) underlying the accumulation of fat in the liver may include excess dietary fat, increased delivery of free fatty acids to the liver, inadequate fatty acid oxidation, and increased de novo lipogenesis. Liver fat is highly correlated with all the components of the metabolic syndrome, independent of obesity, and NAFLD may increase the risk of type 2 diabetes and atherosclerosis. Overproduction of glucose, very low-density lipoproteins, C-reactive protein and coagulation factors by the fatty liver could contribute to the excess risk of cardiovascular disease. The reason(s) why some patients will develop NASH are poorly understood. Circulating free fatty acids may be cytotoxic by inducing lipid peroxidation and hepatocyte apoptosis. Insulin resistance is often associated with chronic low-grade inflammation, and numerous mediators released from immune cells and adipocytes may contribute liver damage and liver disease progression. Understanding the molecular mediators of liver injury would promote the development of mechanism-based therapeutic interventions. This article briefly summarizes the recent advances in our understanding of the relationship between NAFLD/NASH, insulin resistance and the metabolic syndrome.