An increase in liver fat concentration during the peripartum period is extremely common in dairy cows and, to some degree, is probably normal. When severe, it is associated with clinical problems including increased morbidity and mortality and reduced breeding efficiency. Fatty liver develops when serum NEFA concentrations rise and hepatic uptake of NEFA exceeds the liver's ability to synthesize and secrete lipoproteins. In most cases, hepatic lipid accumulation appears to commence prepartum, in association with rising serum NEFA concentrations and declining serum lipoprotein concentrations. Commonly used clinicopathologic tests of liver function do not yield clearly abnormal results except in animals with extremely high concentrations of liver fat. Clinically useful estimates of hepatic lipid concentration can be obtained in the field by determining the buoyancy of needle biopsy samples in liquids of various specific gravities. Clinically ill animals with liver fat concentrations of greater than 35 per cent by weight have a poor prognosis, and those that do survive will have a protracted convalescence. Treatment of dairy cows with clinical fatty liver should be aimed at reducing further adipose lipid mobilization and promoting hepatic lipoprotein synthesis; however, protocols for therapy have not as yet been evaluated critically. Prevention of fatty liver is more rewarding than treatment. Dry cows should be maintained in a moderately fat condition and fed high-quality, palatable feeds in amounts necessary to met or slightly exceed their energy requirements. Free-choice feeding of high-energy feeds should be avoided in late lactation and during the nonlactating period.