Nonalcoholic fatty liver disease (NAFLD) is a burgeoning health problem of unknown etiology that varies in prevalence among ancestry groups. To identify genetic variants contributing to differences in hepatic fat content, we carried out a genome-wide association scan of nonsynonymous sequence variations (n = 9,229) in a population comprising Hispanic, African American and European American individuals. An allele in PNPLA3 (rs738409[G], encoding I148M) was strongly associated with increased hepatic fat levels (P = 5.9 × 10⁻¹⁰) and with hepatic inflammation (P = 3.7 × 10⁻⁴). The allele was most common in Hispanics, the group most susceptible to NAFLD; hepatic fat content was more than twofold higher in PNPLA3 rs738409[G] homozygotes than in noncarriers. Resequencing revealed another allele of PNPLA3 (rs6006460[T], encoding S453I) that was associated with lower hepatic fat content in African Americans, the group at lowest risk of NAFLD. Thus, variation in PNPLA3 contributes to ancestry-related and inter-individual differences in hepatic fat content and susceptibility to NAFLD.