Nonalcoholic fatty liver disease (NAFLD) is strongly associated with insulin resistance and obesity. Fatty liver is defined by accumulation of fat, mainly triglycerides, that constitutes more than 5% of liver weight. Hepatic triglyceride content is determined by the balance between the uptake from diet and adipose tissue, de novo fatty acid synthesis, fatty acid oxidation, and export of VLDL. Various studies using animal models of insulin resistance have presented that Insulin resistance leads to fatty liver. In these animals, de novo fatty acid synthesis rates are increased owning to the activation of SREBP-1c, a transcription factor that activates fatty acid synthesis. Inhibition of SREBP-1c activation in ob/ob mice by deletion of Scap, an escort protein necessary for generating nuclear isoforms of all three SREBPs, prevents fatty liver despite persistent obesity and insulin resistance. The study suggests that hepatic lipogenesis and hepatic glucose production may be regulated by sdifferent branches of the insulin signaling pathway and resolution of fatty liver does not affect hepatic or whole body insulin resistance. However, causal relationship between NAFLD and insulin resistance is still controversial. Various experimental studies have shown that reversal of NALFD ameliorates insulin resistance. Growing epidemiologic evidence suggests that NAFLD is an early predictor of the development of type 2 diabetes. Studies in mice and humans have presented that increased hepatic diacylglycerol activates protein kinase Cm and triggers hepatic insulin resistance in NAFLD. Therapeutic approaches based on this mechanism could alleviate the NAFLD and type 2 diabetes