Mitochondrial dysfunction and oxidative stress play a central role in the pathophysiology of nonalcoholic fatty liver disease (NAFLD). This study aimed to elucidate the mechanism(s) responsible for mitochondrial dysfunction in nonalcoholic fatty liver. Fatty liver was induced in rats with a choline-deficient (CD) diet for 30 days. We examined the effect of CD diet on various parameters related to mitochondrial function such as complex I activity, oxygen consumption, reactive oxygen species (ROS) generation and cardiolipin content and oxidation. The activity of complex I was reduced by 35% in mitochondria isolated from CD livers compared with the controls. These changes in complex I activity were associated with parallel changes in state 3 respiration. Hydrogen peroxide (H₂O₂) generation was significantly increased in mitochondria isolated from CD livers. The mitochondrial content of cardiolipin, a phospholipid required for optimal activity of complex I, decreased by 38% as function of CD diet, while there was a significantly increase in the level of peroxidized cardiolipin. The lower complex I activity in mitochondria from CD livers could be completely restored to the level of control livers by exogenously added cardiolipin. This effect of cardiolipin could not be replaced by other phospholipids nor by peroxidized cardiolipin. It is concluded that CD diet causes mitochondrial complex I dysfunction which can be attributed to ROS-induced cardiolipin oxidation. These findings provide new insights into the alterations underlying mitochondrial dysfunction in NAFLD.