Diabetes mellitus (DM) negatively affects the development and progression of chronic liver diseases (CLD) of various etiologies. Concurrent DM and CLD are also associated with worse clinical outcomes with respect to mortality, the occurrence of hepatic decompensation, and the development of hepatocellular carcinoma (HCC). Unfortunately, early diagnosis and optimal treatment of DM can be challenging, due to the lack of established clinical guidelines as well as the medical complexity of this patient population. We conducted an exploratory review of relevant literature to provide an up-to-date review for internists and hepatologists caring for this patient population. We reviewed the epidemiological and pathophysiological associations between DM and CLD, the impact of insulin resistance on the progression and manifestations of CLD, the pathogenesis of hepatogenic diabetes, as well as the practical challenges in diagnosis and monitoring of DM in this patient population. We also reviewed the latest clinical evidence on various pharmacological antihyperglycemic therapies with an emphasis on liver disease-related clinical outcomes. Finally, we proposed an algorithm for managing DM in patients with CLD and discussed the clinical and research questions that remain to be addressed.