Tissue-resident and recruited macrophages contribute to both host defense and pathology. Multiple macrophage phenotypes are represented in diseased tissues, but we lack deep understanding of mechanisms controlling diversification. Here, we investigate origins and epigenetic trajectories of hepatic macrophages during diet-induced non-alcoholic steatohepatitis (NASH). The NASH diet induced significant changes in Kupffer cell enhancers and gene expression, resulting in partial loss of Kupffer cell identity, induction of Trem2 and Cd9 expression, and cell death. Kupffer cell loss was compensated by gain of adjacent monocyte-derived macrophages that exhibited convergent epigenomes, transcriptomes, and functions. NASH-induced changes in Kupffer cell enhancers were driven by AP-1 and EGR that reprogrammed LXR functions required for Kupffer cell identity and survival to instead drive a scar-associated macrophage phenotype. These findings reveal mechanisms by which disease-associated environmental signals instruct resident and recruited macrophages to acquire distinct gene expression programs and corresponding functions. Display omitted •Myeloid cell diversity in NASH is associated with distinct microanatomical niches•Reprogramming of LXR activity leads to impaired Kupffer cell identify and survival•ATF3 collaborates with LXRs to promote a scar-associated macrophage phenotype•Altered enhancer landscapes enable inference of disease mechanisms Kupffer cells and recruited myeloid cells contribute to the pathology of nonalcoholic steatohepatitis (NASH), but molecular mechanisms specifying their distinct identities and functions are not known. Seidman and colleagues address this problem by defining cell- and disease-specific enhancer landscapes that enable inference of key transcription factors that drive myeloid cell diversity in NASH.