The pathogenesis of non-alcoholic fatty liver disease, particularly the mechanisms whereby a minority of patients develop a more severe phenotype characterised by hepatocellular damage, inflammation, and fibrosis is still incompletely understood. Herein, we discuss two pivotal aspects of the pathogenesis of NASH. We first analyse the initial mechanisms responsible for hepatocellular damage and inflammation, which derive from the toxic effects of excess lipids. Accumulating data indicate that the total amount of triglycerides stored in hepatocytes is not the major determinant of lipotoxicity, and that specific lipid classes act as damaging agents on liver cells. In particular, the role of free fatty acids such as palmitic acid, cholesterol, lysophosphatidylcholine and ceramides has recently emerged. These lipotoxic agents affect the cell behaviour via multiple mechanisms, including activation of signalling cascades and death receptors, endoplasmic reticulum stress, modification of mitochondrial function, and oxidative stress. In the second part of this review, the cellular and molecular players involved in the cross-talk between the gut and the liver are considered. These include modifications to the microbiota, which provide signals through the intestine and bacterial products, as well as hormones produced in the bowel that affect metabolism at different levels including the liver. Finally, the activation of nuclear receptors by bile acids is analysed.