Parenteral nutrition (PN) is a life-saving nutritional support for a large population of hospitalized infants, and lipids make a substantial contribution to their energy and essential fatty acid (FA) needs. A challenge in the care of these infants is that their metabolic needs require prolonged PN support that increases the risk of PN-associated liver disease (PNALD). In recent years, the emergence of new parenteral lipid emulsions containing different source lipids and FA profiles has created nutritional alternatives to the first-generation, soybean oil-based lipid emulsion Intralipid. The limited U.S. introduction of the new-generation fish-oil emulsion Omegaven has generated promising results in infants with PNALD and spawned a renewed interest in how PN and lipid emulsions, in particular, contribute to this disease. Studies suggest that the lipid load and constituents, such as specific FAs, ratio of n-3 (ω-3) to n-6 (ω-6) long-chain polyunsaturated FAs, phytosterols, and vitamin E content, may be involved. There is an existing literature describing the molecular mechanisms whereby these specific nutrients affect hepatic metabolism and function via lipid and bile acid sensing nuclear receptors, such as peroxisome proliferator-activated receptor α, liver X receptor, and farnesoid X receptor, yet virtually no information as to how they interact and modulate liver function in the context of PN in pediatric patients or animal models. This article will review the recent development of parenteral lipid emulsions and their influence on PNALD and highlight some of the emerging molecular mechanisms that may explain the effects on liver function and disease.