The invention is in the field of medical treatments of liver disease, in particular non-alcoholic fatty liver diseases, such as non-alcoholic steatohepatitis. The invention provides a composition comprising an effective amount of a compound capable of increasing the intracellular level of 27-hydroxycholesterol for the treatment of liver inflammation in fatty liver disease. It also provides a method of reducing liver inflammation in a patient with non-alcoholic fatty liver disease by administering an effective amount of 27-hydroxycholesterol.