Background/Aims: Ectopic lipid accumulation in hepatocytes has been identified as a risk factor for the progression of liver fibrosis and is strongly associated with obesity. In particular, the saturated fatty acid palmitate is involved in initiation of liver fibrosis via formation of secondary metabolites by hepatocytes that in turn activate hepatic stellate cells (HSCs) in a paracrine manner. Methods: α-smooth muscle actin-expression (α-SMA) as a marker of liver fibrosis was investigated via western blot analysis and immunofluorescence microscopy in HSCs (LX-2). Sphingolipid metabolism and the generation of the bioactive secondary metabolite sphingosine 1-phosphate (S1P) in response to palmitate were analyzed by LC-MS/MS in hepatocytes (HepG2). To identify the molecular mechanism involved in the progression of liver fibrosis real-time PCR analysis and pharmacological modulation of S1P receptors were performed. Results: Palmitate oversupply increased intra- and extracellular S1P-concentrations in hepatocytes. Conditioned medium from HepG2 cells initiated fibrosis by enhancing α-SMA-expression in LX-2 in a S1P-dependent manner. In accordance, fibrotic response in the presence of S1P was also observed in HSCs. Pharmacological inhibition of S1P receptors demonstrated that S1P₃ is the crucial receptor subtype involved in this process. Conclusion: S1P is synthesized in hepatocytes in response to palmitate and released into the extracellular environment leading to an activation of HSCs via the S1P₃ receptor.