Non-alcoholic fatty liver disease (NAFLD) is highly prevalent in Western countries and has become a serious public health concern. Although Western-style dietary patterns, characterized by a high intake of saturated fat, is considered a risk factor for NAFLD, the molecular mechanisms leading to hepatic fat accumulation are still unclear. In this study, we assessed epigenetic regulation of peroxisome proliferator-activated receptor γ (PPARγ), modifications of gene expression, and lipid uptake in the liver of mice fed a high-fat diet (HFD), and in hepatocyte culture challenged with palmitic acid. Bisulfate pyrosequencing revealed that HFD reduced the level of cytosine methylation in the pparγ DNA promoter. This was associated with increased expression of the hepatic PPARγ, very low-density lipoprotein receptor (VLDLR) and cluster differentiating 36 (CD36), and enhanced uptake of fatty acids and very low-density lipoprotein, leading to excess hepatic lipid accumulation. Furthermore, palmitic acid overload engendered comparable modifications in hepatocytes, suggesting that dietary fatty acids contribute to the pathogenesis of NAFLD through epigenetic upregulation of PPARγ and its target genes. The significance of epigenetic regulation was further demonstrated in hepatocytes treated with DNA methylation inhibitor, showing marked upregulation of PPARγ and its target genes, leading to enhanced fatty acid uptake and storage. This study demonstrated that HFD-induction of pparγ DNA promoter demethylation increased the expression of PPARγ and its target genes, vldlr and cd36, leading to excess lipid accumulation, an important initiating mechanism by which HFD increased PPARγ and lipid accumulation. These findings provide strong evidence that modification of the pparγ promoter methylation is a crucial mechanism of regulation in NAFLD pathogenesis.