An imbalance between neutrophil elastase (NE) and its inhibitor α1‐antitrypsin (A1AT) is known to contribute to the development of obesity‐related inflammation. This study aimed to investigate the role of the NE‐A1AT system in the histological progression of non‐alcoholic fatty liver disease (NAFLD), and to evaluate the ability of it to predict nonalcoholic steatohepatitis (NASH). A total of 252 adults (NAFLD group, n = 202; Healthy group, n = 50) were recruited. Clinical biochemical characteristics, NE and A1AT concentrations were measured in all subjects. Among the NAFLD group, 86 patients had previously undergone liver biopsy and information on histological characteristics was consequently available. The area under receiver operating characteristic curve (AUC) was used to determine the predictive accuracy of the NE‐A1AT system for NASH. NAFLD patients had an elevated serum NE concentration and a reduced A1AT level with consequent NE/A1AT imbalance. NE increased in the early stage of steatosis, preceded the decline in A1AT, dating from the onset of NASH (NAS 3‐4), and subsequent NE/A1AT increased in the presence of NASH. Nonetheless, this increase began to resolve as the disease state progressed to advanced fibrosis. A1AT had a sensitivity (SEN) of 83.8% and a specificity (SP) of 83.3% with the optimal cut‐off of ‐1459.43, NE/A1AT had a SEN of 88.8% and a SP of 83.3% with cut‐off of 0.363 to predict NASH. An increased NE: A1AT ratio is closely associated with liver Inflammation in patients with NASH and could serve as a novel marker to predict NASH in humans. This article is protected by copyright. All rights reserved.