Lack of substantial advances in preclinical testing for hepatotoxicity has meant that drug-induced liver injury (DILI) remains an important issue during both the drug development and post-marketing phases. A number of drug-related, genetic and non-genetic host factors influence the risk of DILI in an individual. Demonstration of human leukocyte antigen genotype as a strong risk factor for development of DILI with a range of drugs has highlighted the role of the adaptive immune system in the pathogenesis of DILI; there is accumulating evidence that drug metabolism genes also contribute to some forms of DILI. Early recognition and prompt withdrawal of the drug is essential in preventing serious hepatic failure and is the critical step in the management of adverse reactions. Diagnosis of DILI relies upon index of suspicion, careful evaluation of a temporal relationship between the exposure to a particular drug and the specific clinical event, as well as exclusion of potential alternative diagnoses. A high negative predictive value of genetic tests can be used to rule out DILI due to particular drugs and to identify correctly the agent underlying DILI in a patient exposed to two concomitant medications.