Objective Non-alcoholic fatty liver disease (NAFLD) is a worldwide health problem with high prevalence and morbidity associated with obesity, insulin resistance, type 2 diabetes mellitus (T2DM), and dyslipidemia. Nano-formulation of luteolin with Zn oxide in the form of Lut/ZnO NPs may improve the anti-diabetic property of each alone and ameliorate the insulin resistance thus management of NAFLD. This study aimed to measure the efficiency of Lut/ZnO NPs against insulin resistance coupled with NAFLD and T2DM. Methods A diabetic rat model with NAFLD was induced by a high-fat diet and streptozotocin (30 mg/kg I.P). Serum diabetogenic markers levels, lipid profile, and activity of liver enzymes were measured beside liver oxidative stress markers. Moreover, the hepatic expressions of PI3K/AKT/FoxO1/SERBP1c as well as heme oxygenase-1 were measured beside the histopathological examination. Results Lut/ZnO NPs treatment effectively reduced hyperglycemia, hyperinsulinemia, and ameliorated insulin resistance. Additionally, Lut/ZnO NPs improved the hepatic functions, the antioxidant system, and reduced the oxidative stress markers. Furthermore, the lipid load in the liver, as well as the circulating TG and TC, was minified via the suppression of lipogenesis and gluconeogenesis. Moreover, Lut/ZnO NPs activated the PI3K/AKT signaling pathway, hence inactivating FoxO1, therefore enhancing the hepatic cells’ insulin sensitivity. Conclusion Lut/ZnO NPs have a hepatoprotective effect and may relieve the progression of NAFLD by alleviating insulin resistance, ameliorating the antioxidant status, and regulating the insulin signal pathway.