No, and to me that is the worst shortcoming of the device. You can add XBMC or Boxee to get the functionality, but the results are less than acceptable IMHO.
I have many of my dvd's ripped and converted to mp4 in iTunes, but even these don't play all that well, and is a real pain for tv series dvd's. I use it now primarily for music streaming. I really wish it did a better job. I just bought a WDTV Live Plus which does a decent job with video_ts folders either from a local disk (as I have it now) or over a network share, even if the menu systems leaves something to be desired; the TV definitely wins in that department. The WDTV Live Plus also has a built-in file server so that I can mount it from my iMac and rip files to it or make other changes; I have been busy adding artwork so that they show up in thumbnail view and I can see my movies at a glance.