Nonalcoholic fatty liver disease (NAFLD), a common cause of chronic liver disease in adults, is incompletely characterized in children. We conducted a prospective study to better characterize the clinical presentation of NAFLD in children and to determine the effect of lifestyle advice in the management of pediatric NAFLD. From June 2001 to April 2003, 84 children (age 3-18.8 yr) who had elevated aminotransferases and the diagnosis of NAFLD confirmed via liver biopsy underwent a 2-hour oral glucose tolerance test and a 12-month program of lifestyle advice consisting of diet and physical exercise. Thirty-four (40.5%) patients were obese (body mass index [BMI] >97th percentile), and 43 (51.2%) were overweight (BMI 85th-97th percentile). Ten (12%) had abnormal glucose tolerance; 10 (12%) had elevated triglycerides, cholesterol, or both; and all had normal blood pressure. Most children (67/84, 80%) were insulin-resistant, including the 7 children with normal BMI (<85th percentile). Increased liver fibrosis was present in 49 (58.1%) patients and was independently associated with obesity (OR 2.7, 95% CI 1.2-6.2) and age (1-year increase; OR 1.2, 95% CI 1.04-1.5). A 12-month program with diet and physical exercise resulted in a significant decrease in BMI, and levels of fasting glucose, insulin, lipids, and liver enzymes, as well as liver echogenicity on ultrasonography. In conclusion, children with NAFLD are almost always insulin-resistant regardless of BMI. Obesity and older age are independently associated with increased liver fibrosis. A simple lifestyle advice program significantly improves insulin resistance, and the liver disease in pediatric NAFLD.