Lipid droplet (LD) accumulation is the defining characteristic of non‐alcoholic and alcoholic fatty liver disease. This chapter highlights the major pathways of lipid metabolism that influence LD accumulation and explores key proteins that regulate LD turnover and that link LDs to cellular dysfunction and liver disease. Fatty acids (FAs) serve as the building blocks for the biosynthesis of many complex lipids including triacylglycerols (TAGs), phospholipids, and cholesterol esters. The contribution of FAs from de novo lipogenesis is markedly increased in subjects with non‐alcoholic fatty liver disease (NAFLD) and can account for up to nearly 30% of hepatic FAs. Lipolysis of TAG via cytosolic lipases and lipophagy are the two pathways thought to contribute to hepatic LD degradation. Ectopic LD accumulation is correlated with insulin resistance in numerous tissues including the liver. Numerous factors including diet, genetics, predisposing diseases and hepatitis C virus can lead to NAFLD through different etiological paths.