Nonalcoholic fatty liver disease (NAFLD) is a rapidly emerging chronic liver disease and is reported to affect up to 70-80% of overweight and obese individuals. NAFLD represents a spectrum of liver diseases that range from simple hepatic steatosis, to a more severe and treatment resistant stage that features steatosis plus inflammation, termed nonalcoholic steatohepatitis (NASH), which may in turn progress to hepatic fibrosis, cirrhosis, and sub-acute liver failure. Thus, NAFLD and its subsequent complications create a significant health burden, and currently there is no effective treatment strategy. The biochemical mechanisms that underlie NAFLD are unclear at this time, but there is evidence that insulin resistance is a major contributing factor. In addition, circulating concentrations of inflammatory cytokines (e.g., TNF-alpha, IL-6) as well as decreased antiinflammatory factors (e.g., adiponectin, IL-10) are not only implicated in the development of insulin resistance and type 2 diabetes, but are also related to NAFLD. Such inflammatory mechanisms are fundamental in the progression of NAFLD toward higher risk cirrhotic states. This review outlines the leading theories of pathogenesis of NAFLD and highlights the potential role of exercise in treating and preventing NAFLD. Regular exercise can reverse insulin resistance, suppress low-grade systemic inflammation, and attenuate inflammatory markers associated with NAFLD. Thus, exercise has the potential to become an effective treatment and prevention modality for NAFLD and NASH.