Background & Aims: Portal fibrosis and linkage is a key feature of progressive disease in nonalcoholic steatohepatitis (NASH), but not simple steatosis. It is underappreciated and poorly understood. Fatty liver has impaired regeneration that induces a secondary replicative pathway using bipotential, periportal, hepatic progenitor cells (HPCs). We propose that activation of this pathway, with increased cell injury in NASH, also induces a periportal ductular reaction (DR) that could produce a profibrogenic stimulus. Methods: Biopsy specimens from 107 patients with nonalcoholic fatty liver disease and 11 controls were immunostained with cytokeratin-7 to quantify the DR and HPCs, and with p21 to assess hepatocyte replicative arrest. These results were correlated with clinicopathologic variables. Results: Patients with nonalcoholic fatty liver disease had expansion of HPCs, with a strong association between HPCs and the DR (rs = 0.582, P < .0001). In those with NASH (n = 69) there was an increased DR compared with simple steatosis, which correlated with the stage of fibrosis (rs = 0.510, P < .0001). The DR increased with the grade of NASH activity (rs = 0.478, P < .0001), grade of portal inflammation (rs = 0.445, P < .0001), and extent of hepatocyte replicative arrest (rs = 0.446, P < .0001). Replicative arrest was in turn associated with insulin resistance (rs = 0.450, P < .0001) and NASH activity (rs = 0.452, P < .0001). By multivariate analysis, the extent of DR (odds ratio [OR] = 17.9, P = .016), hepatocyte ballooning (OR = 8.1, P < .0001), and portal inflammation (OR = 3.3, P = .005) were associated independently with fibrosis. Conclusions: These findings suggest that an altered replication pathway in active NASH promotes a periportal DR, which in turn may provoke progressive periportal fibrogenesis.