Oligomeric and polymeric proanthocyanidins (PAC) were biotransformed with Saccharomyces cerevisiae to improve bioavailability and bioactivity. Biotransformation significantly increased the bioavailability of PAC in vitro and generated many metabolites, most notably, 3-aminophenol, pyrogallol, phloroglucinol, 4-hydroxyphenylacetamide, 2,4-dihydroxy-6-methylbenzaldehyde, 2,4,6-trihydroxyacetophenone, and 2-hydroxyphenylacetic, 3-aminosalicylic, dihydroxybenzoic, 2-hydroxycinnamic, 3-phenyllactic, and gallic acids. The bioactivity of biotransformed (BT)-PAC and non-BT-PAC was compared using palmitic acid (PA)-induced steatosis/nonalcoholic fatty liver disease (NAFLD) and PA + bacterial lipopolysaccharide-induced nonalcoholic steatohepatitis (NASH) models of AML12 hepatocytes. BT-PAC reduced the PA-induced cellular oxidative stress and lipid accumulation by activating the nuclear factor erythroid 2-related factor 2 (Nrf2)/antioxidant response element (ARE) pathway and modulating key regulators of cellular lipid metabolism. BT-PAC reduced the progression of steatosis to NASH in vitro by suppressing toll-like receptor 4-mediated cellular inflammation. Non-BT-PAC was less potent in the reduction of cellular lipotoxicity and inflammation. S. cerevisiae-mediated biotransformation significantly enhances the bioavailability of PAC and the bioactivity against steatosis and NASH.