Non‐alcoholic fatty liver disease (NAFLD) is strongly associated with obesity. Omega‐3 polyunsaturated fatty acids, such as eicosapentaenoic acid (EPA) are effective triglyceride lowering and anti‐inflammatory agents. We have previously shown that EPA reversed high fat (HF) diet‐induced inflammation and hepatic steatosis, as indicated by reduced hepatic triglyceride accumulation, in B6 mice. We further investigated mechanisms mediating the effects of EPA in liver tissues from these mice, and also used HepG2 human hepatoma cells to determine direct effects of EPA in liver cells. Using real time PCR, we demonstrated that these effects of EPA are mediated by decreased hepatic fatty acid synthesis, as shown by reduced expression of the lipogenic gene fatty acid synthase (FAS), increased hepatic fatty acid oxidation, as shown by increased expression of peroxisome proliferator‐activated receptor alpha (PPAR‐α) and reduced carbohydrate metabolism, as shown by downregulation of glucose‐6‐phosphatase (G6PC) in HF‐EPA‐fed mice vs. HF‐fed mice. Furthermore, markers of hepatic inflammation were also decreased, as shown by reduced levels of tumor necrosis factor alpha (TNF‐α) mRNA in HF‐EPA‐fed mice vs HF‐fed mice. These findings were further validated in time‐ and dose‐dependent experiments in HepG2 cells treated with 50 μM EPA for 24 hours vs vehicle control on both lipid metabolism and inflammation. Moreover, EPA also reduced lipogenesis in HepG2 cells pretreated with palmitic (PA) and/or oleic acid (OA) on lipogenic gene expression. Detailed mechanistic studies are ongoing to further determine the hepatic metabolic and signaling pathways targeted by EPA. These findings will provide important insight into beneficial effects of omega‐3 fatty acids in NAFLD and may provide new therapeutic targets in fatty liver‐related diseases.