Nonalcoholic fatty liver disease (NAFLD) is an increasing global public health burden. NAFLD is strongly associated with type 2 diabetes mellitus, obesity and cardiovascular disease and begins with intrahepatic triacylglycerol accumulation. Under healthy conditions, the liver regulates lipid metabolism to meet systemic energy needs in the fed and fasted states. The processes of fatty acid uptake, fatty acid synthesis and the intracellular partitioning of fatty acids into storage, oxidation and secretion pathways are tightly regulated. When one or more of these processes becomes dysregulated, excess lipid accumulation can occur. Although genetic and environmental factors have been implicated in the development of NAFLD, it remains unclear why an imbalance in these pathways begins. The regulation of fatty acid partitioning occurs at several points, including during triacylglycerol synthesis, lipid droplet formation and lipolysis. These processes are influenced by enzyme function, intake of dietary fats and sugars and whole-body metabolism, and are further affected by the presence of obesity or insulin resistance. Insight into how the liver controls fatty acid metabolism in health and how these processes might be affected in disease would offer the potential for new therapeutic treatments for NAFLD to be developed.