Recurrent hepatitis C virus (HCV) is the most common cause of graft loss for HCV-infected recipients of liver transplantation (LT). Diabetes mellitus (DM) has been associated with increased rates of fibrosis progression, but whether steatosis affects post-LT outcomes independently of DM is unclear. Using a retrospective cohort of HCV-infected LT recipients, we determined the prevalence of hepatic steatosis and evaluated the relationship between steatosis on index biopsy 1 year after LT (±6 months) and the severity of the subsequent fibrosis. One hundred fifty-two LT recipients with HCV were followed up for a median of 2.09 years (range = 0.13-6.17 years) after index biopsy; the median number of biopsy procedures per patient after index biopsy was 2 (range = 1-6). Steatosis (≥5%) was present in 45 individuals (29.6%) according to index biopsy samples taken 1 year after LT; the steatosis was mild (grade 1) in 80% of the patients. In the multivariate analysis, the presence of steatosis 1 year after LT was positively associated with HCV genotype 3 [odds ratio (OR) = 3.60, P = 0.02], older donor age (OR = 1.03, P = 0.04), and pre-LT hypertension (OR = 3.29, P = 0.009). Two years after index biopsy, the cumulative rate of significant fibrosis (F2-F4 on the Ludwig-Batts scale) was 49% in the patients with steatosis at 1 year and 24% in the patients without steatosis (P = 0.003). In the multivariate analysis, steatosis at 1 year was an independent predictor of subsequent F2 to F4 fibrosis (HR = 2.63, 95% CI = 1.49-4.63). Steatosis was a stronger predictor of fibrosis in the setting of sirolimus use (hazard ratio = 9.38, 95% confidence interval = 1.37-64.16, P = 0.02). In conclusion, steatosis is frequent in the early post-LT period, and steatosis within the first year after LT is a marker of a higher risk of fibrosis progression in HCV-infected patients. Liver Transpl, 2011. © 2011 AASLD.