The extracellular matrix deposition in the liver parenchyma is a major component of cirrhosis. A great deal of knowledge has been gathered in the past two decades regarding the regulation and dynamics of fibrogenesis, and based on these advances, a review is delivered on the pathophysiology, diagnosis and therapy of liver fibrosis. The key event in fibrogenesis is the activation of hepatic stellate cells, and in its mechanism, inflammation, oxidative stress, steatosis, cytokines, growth factors, enzymes and enzyme inhibitors play a pivotal role. The phenotypic response of activated stellate cells comprises proliferation, fibrogenesis, contractility, loss of vitamin A and matrix degradation. In the diagnosis of liver fibrosis, besides liver biopsy--as "golden standard"--recently non-invasive methods, such as imaging techniques, and mainly serum fibrosis markers and indices have widely been studied. Experimental and clinical data have proved the reversibility of fibrosis, and suggested that an effective antifibrotic treatment in the future may serve even for the prevention of cirrhosis.