Hepatic inflammation is the key factor in non-alcoholic steatohepatitis (NASH) and promotes progression to liver damage. We recently identified dietary cholesterol as the cause of hepatic inflammation in hyperlipidemic mice. We now show that hepatic transcriptome responses are strongly dependent on cholesterol metabolism during diet-induced NASH and its inhibition by fenofibrate. Furthermore, we show that, despite doubling hepatic steatosis, pharmacological LXR activation reverses hepatic inflammation, in parallel with reversing hepatic cholesterol levels. Together, the results indicate a prominent role of cholesterol during the development, inhibition and reversal of hepatic inflammation in NASH and reveal potential new therapeutic strategies against NASH.