Alongside the liver, white adipose tissue (WAT) is critical in regulating systemic energy homeostasis. Although each organ has its specialised functions, they must work coordinately to regulate whole-body metabolism. Adipose tissues and the liver are relatively resilient and can adapt to an energy surplus by facilitating triglyceride (TG) storage up to a certain threshold level without significant metabolic disturbances. However, lipid storage in WAT beyond a "personalised" adiposity threshold becomes dysfunctional, leading to metabolic inflexibility, progressive inflammation, and aberrant adipokine secretion. Moreover, the failure of adipose tissue to store and mobilise lipids results in systemic knock-on lipid overload, particularly in the liver. Factors contributing to hepatic lipid overload include lipids released from WAT, dietary fat intake, and enhanced de novo lipogenesis. In contrast, extrahepatic mechanisms counteracting toxic hepatic lipid overload entail coordinated compensation through oxidation of surplus fatty acids in brown adipose tissue and storage of fatty acids as TGs in WAT. Failure of these integrated homeostatic mechanisms leads to quantitative increases and qualitative alterations to the lipidome of the liver. Initially, hepatocytes preferentially accumulate TG species leading to a relatively "benign" non-alcoholic fatty liver. However, with time, inflammatory responses ensue, progressing into more severe conditions such as non-alcoholic steatohepatitis, cirrhosis, and hepatocellular carcinoma, in some individuals (often without an early prognostic clue). Herein, we highlight the pathogenic importance of obesity-induced "adipose tissue failure", resulting in decreased adipose tissue functionality (i.e. fat storage capacity and metabolic flexibility), in the development and progression of NAFL/NASH.