The idiosyncratic nature and poor prognosis of drug-induced liver injury (DILI) make this type of reaction a major safety issue during drug development, as well as the most common cause for the withdrawal of drugs from the pharmaceutical market. The key to predicting and preventing DILI is understanding the underlying mechanisms. DILI is initiated by direct hepatotoxic effects of a drug, or a reactive metabolite of a drug. Parenchymal cell injury induces activation of innate and/or adaptive immune cells, which, in turn, produce proinflammatory and tissue hepatotoxic mediators, and/or mount immune reactions against drug-associated antigens. Understanding the molecular and cellular elements associated with these pathways can help identify risk factors and may ultimately facilitate the development of strategies to predict and prevent DILI.