Drug-induced liver injury (DILI) is a severe adverse effect. The majority of DILI cases are idiosyncratic and several mechanisms have been postulated to explain why some subjects develop DILI with drugs that are safe for the majority of individuals. Major mechanisms proposed for DILI are based on the production of reactive metabolites, immune-mediated hepatotoxicity, a “danger signal” hypothesis and/or alterations in mitochondrial function. These mechanisms are compatible with the hypothesis for genetic variability in drug metabolism or bioactivation and are a major determinant for DILI. In this review we summarize present knowledge on underlying mechanisms, and clinical expression as well as genetic and non-genetic factors that modulate the risk of developing DILI. With regard to DILI pharmacogenomics, we summarize current evidence on the role of polymorphisms in genes coding for the drug-metabolizing enzymes CYP1A2, CYP2C9, CYP2C19, CYP2D6, CYP2E1, CYP3A4, CYP3A5, NAT2, GSTM1, GSTT1, UGT1A1, UGT1A3, UGT1A9 and UGT2B7. Conclusive evidence for association with DILI risk has been obtained for non-mutated CYP2E1, slow NAT2 and slow GSTM1 genotypes. For the rest of the genes additional pharmacogenomics and toxicogenomics studies are required. We identify potential sources of heterogeneity in studies carried out so far as well as new genetic targets which require further investigation.