The rs72613567:TA polymorphism in 17-beta hydroxysteroid dehydrogenase 13 (HSD17B13) has been found to reduce the progression from steatosis to metabolic dysfunction-associated steatohepatitis (MASH). In this study, we sought to define the pathogenic role of HSD17B13 in triggering liver inflammation. Here, we demonstrate that HSD17B13 forms liquid–liquid phase separation (LLPS) around lipid droplets in the livers of MASH patients. The dimerization of HSD17B13 supports the LLPS formation and promotes its enzymatic function. HSD17B13 LLPS increases the biosynthesis of platelet activating factor (PAF), which in turn promotes fibrinogen synthesis and leukocyte adhesion. Blockade of the PAF receptor or STAT3 pathway inhibits the fibrinogen synthesis and leukocyte adhesion. Importantly, adeno-associated viral-mediated xeno-expression of human HSD17B13 exacerbates western diet/carbon tetrachloride-induced liver inflammation in Hsd17b13−/− mice. In conclusion, our results suggest that HSD17B13 LLPS triggers liver inflammation by promoting PAF-mediated leukocyte adhesion, and targeting HSD17B13 phase transition could be a promising therapeutic approach for treating hepatic inflammation in chronic liver disease.