Nonalcoholic fatty liver disease (NAFLD) is one of the most common hepatic disorders in the United States, but uncertainty remains as to the optimal way to manage it. Using the case of Mr T, a 60-year-old man with obesity, diabetes mellitus, and increased serum transaminase levels, an evidence-based approach to diagnosis and treatment is discussed. Diagnosis of NAFLD is based on patient clinical profile and risk factors for metabolic syndrome, the exclusion of other liver diseases, radiologic imaging and sometimes biopsy. At this point in Mr T's disease, the most important step is differentiation between simple steatosis and nonalcoholic steatohepatitis (NASH). Simple steatosis has a benign natural history, but NASH is progressive and may lead to cirrhosis, liver failure, and liver cancer. An evidence-based approach to treatment is limited by lack of large randomized trials, particularly of combinations of therapies, but weight loss, exercise, and medical therapies targeted at the mechanism of liver injury in NASH are recommended. Improved noninvasive diagnostic tests, a clearer understanding of the natural history of NAFLD, and large, well-designed clinical trials are needed.