A total of 40 NASH patients (lean and obese) will be enrolled. All will be advised dietary and exercise protocol. Twenty patients will be randomized to receive Pentoxifylline in a dose of 1200mg/day in 3 divided doses. Another twenty patients will receive Pioglitazone in a dose of 30 mg/day. The subjects will be randomly assigned to receive either pentoxifylline or pioglitazone (randomization will be computer-generated). Patients will be followed with liver biochemistry at monthly interval for initial 3 months and subsequently at 3 month interval. .Liver biopsy will be repeated at the end of 6 months of therapy. The pathologist will blinded to the drug administered to the NASH patients.