The diagnosis of drug-induced liver injury (DILI) is challenging and based on complex diagnostic criteria. DILI falls into two main categories i) intrinsic "dose-dependent" Type A reactions ii) "idiosyncratic" or Type B reactions (which are usually not predictable). Idiosyncratic reactions can be immunoallergic (hypersensitivity), or metabolic, although overlap between categories can occur. The aim of this review is to summarise the general view of underlying mechanisms in DILI and to highlight individual risk factors for developing hepatotoxicity. Polymorphisms of bioactivation/toxification pathways through CYP450 enzymes (Phase I), detoxification reactions (Phase II) and excretion/transport (Phase III) are explored together with immunological factors that might determine DILI. The importance of establishing a multidisciplinary and multi-centric network to promote the understanding and research in hepatotoxicity is underlined. Challenges such as genetic analyses for association studies and whole genome studies, pharmacogenetic testing and future approaches to study DILI are considered. Knowledge regarding these operational mechanisms could provide further insight for the prospective identification of susceptible patients at risk of developing drug-induced hepatotoxicity.