Non-alcoholic fatty liver disease (NAFLD) encompasses a range of liver histology severity and outcomes in the absence of chronic alcohol use. The mildest form is simple steatosis in which triglycerides accumulate within hepatocytes. A more advanced form of NAFLD, non-alcoholic steatohepatitis (NASH), includes inflammation and liver cell injury, progressive to cryptogenic cirrhosis. Although prevalence in children is very difficult to establish, NAFLD is probably the most common cause of liver disease in preadolescent and adolescent groups. Over the last two decades the rise in the prevalence rates of overweight and obesity likely explains the NAFLD epidemic worldwide. NAFLD is strongly associated with abdominal obesity, type 2 diabetes, and dyslipidemia, and most patients have evidence of insulin resistance. Thus, NAFLD shares many features of the metabolic syndrome, a highly atherogenic condition, and its presence could signify a substantial cardiovascular risk. Accurate diagnosis and staging of NAFLD requires liver biopsy. The development of non-invasive surrogate markers and the advancement in imaging technology will aid in the screening of large populations at risk for NAFLD. While the optimal treatment has yet to be determined, lifestyle modification through diet and exercise should be attempted in children diagnosed with NAFLD. This review outlines current understanding, recent advances and challenges on pediatric NAFLD for both clinicians and researchers. Key words: Fatty liver.