Induction of the unfolded protein response (UPR) is recognized as central to fatty liver disease (FLD) pathophysiology. This pathway may be a potential therapeutic target for FLD, as well as other diseases. However, fundamental questions as to how UPR contributes to FLD remain unanswered. Conflicting data suggest that this pathway can both protect against and augment this disease. Here, we review the relationship between protein secretion, endoplasmic reticulum function (ER), and UPR activation. The UPR serves to maintain secretory pathway homeostasis by enhancing the protein folding environment in the ER, and we review data investigating the role for individual UPR players in fatty liver (steatosis). We explore a novel concept in the field that all cases of UPR activation do not equal "ER stress". Rather, different types of UPRs that can either protect against or cause FLD are discussed. Refining our current understanding of this complex pathway is particularly important, as drugs that affect the protein folding environment in the ER and affect UPR activation are being successful in clinical trials for FLD.