Objective Decreased capacity of fatty acid oxidation in hepatic mitochondria is likely to play a significant role in the pathogenesis of non-alcoholic fatty liver disease (NAFLD). Carnitine is a modulator of mitochondrial free fatty acid transport and oxidation. The purpose of this study was to evaluate the effect of carnitine on hepatic steatosis in patients with diabetes. Methods Seventy-two outpatients with NAFLD, who were receiving medical treatment for type 2 diabetes, were randomly assigned to receive double-blind oral carnitine orotate 900 mg (GODEX®) daily (n = 36) or placebo (n = 36) for 3 months. Hepatic steatosis was assessed by using hepatic computed tomography (CT) attenuation values (Hounsfield units) obtained by unenhanced low-dose CT at baseline and 3 months after initiation of treatment. Also, biochemical marker for liver function and glycemic control were measured. Results There was no difference in the baseline mean liver attenuation between carnitine-treated and control groups (39.6 ± 10.8 HU vs. 42.7 ± 9.2 HU, P = 0.213). After 3 months of treatment, carnitine-treated group showed significant increase in mean liver attenuation (+6.1 ± 8.5 HU, P < 0.001) while control group did not (+1.0 ± 7.0 HU, P = 0.377; P = 0.002, between groups). Both serum aspartate aminotransferase (P < 0.001) and alanine aminotransferase (P < 0.001) level were also reduced significantly in the carnitine-treated group. Those on treatment with carnitine showed improvement in HbA1c level with 0.33% decrease from baseline (P < 0.007). Other metabolic marker remained unchanged after treatment in both groups. Conclusion Three months of treatment with carnitine improved hepatic steatosis and liver enzymes levels in diabetic patients with NAFLD. Carnitine was well tolerated and also improved glycemic control.