Mitochondrial dysfunction is involved in the three stages of the transition from lack of exercise and excessive food intake to insulin resistance, diabetes and non‐alcoholic steatohepatitis (NASH). In muscle, lack of exercise, a fat‐rich diet, a polymorphism in peroxisome proliferator‐activated receptor γ coactivator‐1 (PGC‐1), and possibly age‐related mitochondrial DNA (mtDNA) mutations may variously combine their effects to decrease PGC‐1 expression, mitochondrial biogenesis and fat oxidation. Together with excessive food intake, insufficient fat oxidation causes fat accumulation and cellular stress in myocytes. The activation of Jun N‐terminal kinase and protein kinase C‐θ triggers the serine phosphorylation and inactivation of the insulin receptor substrate, and hampers the insulin‐mediated translocation of glucose transporter‐4 to the plasma membrane. Initially, the trend for increased blood glucose increases insulin secretion by pancreatic β‐cells. High plasma insulin levels compensate for insulin resistance in muscle and maintain normal blood glucose levels. Eventually, however, increased uncoupling protein‐2 expression and possibly acquired mtDNA mutations in pancreatic β‐cells can blunt glucose‐mediated adenosine triphosphate (ATP) formation and insulin secretion, to cause diabetes in some patients. High plasma glucose and/or insulin levels induce hepatic lipogenesis and cause hepatic steatosis. In fat‐engorged hepatocytes, several vicious cycles involving tumor necrosis factor‐α, reactive oxygen species (ROS), peroxynitrite, and lipid peroxidation products alter respiratory chain polypeptides and mtDNA, thus partially blocking the flow of electrons in the respiratory chain. The overreduction of upstream respiratory chain complexes increases mitochondrial ROS and peroxynitrite formation. Oxidative stress increases the release of lipid peroxidation products and cytokines, which together trigger the liver lesions of NASH.