Nonalcoholic fatty liver disease is a relatively new hepatic sequela of obesity and type 2 diabetes. The pathogenesis of liver injury and disease progression in nonalcoholic fatty liver disease, however, is poorly understood. The present study examined the hypothesis that the composition of fatty acids in the steatotic liver promotes liver injury. Using dietary models of hepatic steatosis characterized by similar accumulation of total triglyceride but different composition of fatty acids, we show that hepatic steatosis characterized by increased saturated fatty acids is associated with increased liver injury and markers of endoplasmic reticulum stress (e.g. X-box binding protein-1 mRNA splicing and glucose-regulated protein 78 expression). These changes preceded and/or occurred independently of obesity and differences in leptin, TNFalpha, insulin action, and mitochondrial function. In addition, hepatic steatosis characterized by increased saturated fatty acids reduced proliferative capacity in response to partial hepatectomy and increased liver injury in response to lipopolysaccharide. These data suggest that the composition of fatty acids in the steatotic liver is an important determinant of susceptibility to liver injury.