Idiosyncratic drug-induced liver injury (IDILI) is a significant problem. Little is known with certainty about the mechanisms of IDILI. However, there is growing evidence that most IDILI is immune mediated and caused by reactive metabolites. The two major and complementary hypotheses that link reactive metabolite formation with the induction of an immune response that can lead to IDILI are the hapten and danger hypotheses. Specifically, a reactive metabolite can bind to proteins and make them foreign; however, without activation of antigen presenting cells (APCs), the immune response will be immune tolerance. Not all reactive metabolites are associated with the same risk of causing IDILI. If the reactive metabolite can also cause some cell damage, this can lead to the release of danger-associated molecular pattern molecules (DAMPs) that activate APCs. Other hypotheses for the mechanism of IDILI include mitochondrial injury, inhibition of the bile salt export pump, and endoplasmic reticulum stress. These mechanisms may be complementary to the danger hypothesis in that they may cause the release of DAMPs. None of these hypotheses has been adequately tested. Previous animal models have had characteristics very different from IDILI in humans and are unlikely to involve the same mechanism. However, impairment of immune tolerance has led to a model with characteristics very similar to IDILI in humans. This will make it possible to rigorously test hypotheses. A better mechanistic understanding of IDILI should lead to better methods to screen drug candidates for IDILI risk and treat IDILI when it occurs.