Magnetic resonance spectroscopy (MRS) is a non-invasive method for quantitative estimation of liver fat. Knowledge of its imprecision, which comprises biological variability and measurement error, is required to design therapeutic trials with measurement of change. The role of adipocyte lipolysis in ectopic fat accumulation remains unclear. We examined the relationship between liver fat content and indices of lipolysis, and determine whether lipolysis reflects insulin resistance or metabolic liver disease. Imprecision of measurement of liver fat was estimated from duplicate measurements by MRS at one month intervals. Patients provided fasting blood samples and we examined the correlation of liver fat with indices of insulin resistance, lipolysis and metabolic liver disease using Kendall Tau statistics. The coefficient of variation of liver fat content was 14.8%. Liver fat was positively related to serum insulin (T = 0.48, p = 0.042), homeostasis model assessment (HOMA)-B% (T = −0.48, p = 0.042), and body mass index (BMI) (T = 0.59, p = 0.012); and inversely related to HOMA-S% (T = −0.48, p = 0.042), serum glycerol (T = −0.59, p = 0.014), and serum caeruloplasmin (T = 0.055, p = 0.047). Our estimate of total variability in liver fat content (14.8%) is nearly twice that of the reported procedural variability (8.5%). We found that liver fat content was significantly inversely related to serum glycerol but not to non-esterified fatty acids (NEFA), suggesting progressive suppression of lipolysis. Reduction of caeruloplasmin with increasing liver fat may be a consequence or a cause of hepatic steatosis. Full article