INCLUSION CRITERIA

Age at entry of at least 18 years.

Serum alanine or aspartate aminotransferase activities that are above the upper limit of normal.

Evidence of chronic steatohepatitis, on liver biopsy done within the previous 12 months. Histologic criteria of steatohepatitis: diffuse, chronic liver disease characterized by (1) macrovesicular steatosis, (2) inflammation or evidence of hepatocellular drop-out, and (3) acinar zone 3 hepatocellular injury (ballooning degeneration). Additionally helpful, but not required, features include the presence of Mallory's hyalin and pericellular/sinusoidal fibrosis that predominantly involves zone 3.

Absence of other forms of liver disease.

Absence of significant alcohol consumption (less than 7 drinks per week during the previous year).

Written informed consent.

EXCLUSION CRITERIA

Evidence of another form of liver disease.

Hepatitis B as defined as presence of hepatitis B surface antigen (HBsAg).

Hepatitis C as defined by presence of hepatitis C virus (HCV) RNA in serum.

Autoimmune hepatitis as defined by anti-nuclear antibody (ANA) of 1:160 or greater and liver histology consistent with autoimmune hepatitis or previous response to immunosuppressive therapy.

Autoimmune cholestatic liver disorders as defined by elevation of alkaline phosphatase and anti-mitochondrial antibody of greater than 1:80 or liver histology consistent with primary biliary cirrhosis or elevation of alkaline phosphatase and liver histology consistent with sclerosing cholangitis.

Wilson disease as defined by ceruloplasmin below the limits of normal and liver histology consistent with Wilson disease.

Alpha-1-antitrypsin deficiency as defined by alpha-1 antitrypsin level less than normal and liver histology consistent with alpha-1-antitrypsin deficiency.

Hemochromatosis as defined by presence of 3+ or 4+ stainable iron on liver biopsy and homozygosity for C282Y or compound heterozygosity for C282Y/H63D.

Drug-induced liver disease as defined on the basis of typical exposure and history.

Bile duct obstruction as shown by imaging studies.

History of excess alcohol ingestion, averaging more than 30 gm/day (3 drinks per day) in the previous 10 years, or history of alcohol intake averaging greater than 10 gm/day (1 drink per day: 7 drinks per week) in the previous one year.

Contraindications to liver biopsy: platelet counts less than 75,000/mm(3) or prothrombin time greater than 16 seconds.

Decompensated liver disease, Child-Pugh score greater than or equal to 7 points.

History of gastrointestinal bypass surgery or ingestion of drugs known to produce hepatic steatosis including corticosteroids, high-dose estrogens, methotrexate, tetracycline or amiodarone in the previous 6 months.

Presence of diabetes mellitus as defined by: fasting plasma glucose of greater than or equal to 126 mg/dl or diabetic symptoms with a random plasma glucose of greater than or equal to 200 mg/dl.

Use of antidiabetic drugs, including insulin, biguanides, sulfonylureas, or thiazolidinediones in the previous 6 months.

Significant systemic or major illnesses other than liver disease, including congestive heart failure, coronary artery disease, cerebrovascular disease, pulmonary disease, renal failure, organ transplantation, serious psychiatric disease, malignancy that, in the opinion of the investigator would preclude treatment with pioglitazone and adequate follow up.

Positive test for anti-HIV.

Active substance abuse, such as alcohol, inhaled or injection drugs within the previous one year.

Pregnancy or inability to practice adequate contraception in women of child-bearing potential.

Evidence of hepatocellular carcinoma: alphafetoprotein levels greater than 200 ng/ml and/or liver mass on imaging study that is suggestive of liver cancer.

Any other condition which, in the opinion of the investigators would impede competence or compliance or possibly hinder completion of the study.

History of hypersensitivity reactions to thiazolidinediones.