AimTo compare the effects of sodium‐glucose co‐transporter‐2 inhibitors (SGLT2is) versus dipeptidyl peptidase‐4 inhibitors (DPP4is) on liver function in patients with type 2 diabetes (T2D) in Japan.Materials and MethodsThis was a Japanese retrospective cohort study using the RWD Database (1 January 2015 to 24 September 2021). Patients newly treated with an SGLT2i or a DPP4i were matched 1:4 (SGLT2i:DPP4i) using propensity score. The primary endpoint was the change from baseline to 1 year after the index date in alanine aminotransferase (ALT). Secondary endpoints included change from baseline in various laboratory test results, including the Fibrosis‐4 (FIB‐4) index, aspartate aminotransferase, gamma‐glutamyl transpeptidase (GGT), albumin and HbA1c. Endpoints were compared between treatment groups using Welch's t‐test in the full population and in subgroups stratified by baseline characteristics.ResultsBaseline characteristics of 955 and 3063 matched patients newly treated with an SGLT2i and a DPP4i, respectively, were well balanced. Patients receiving an SGLT2i had significantly greater reductions in ALT, FIB‐4 index and GGT and a significantly greater increase in albumin than patients receiving a DPP4i. A significantly greater change from baseline in ALT was observed in the SGLT2i group than in the DPP4i group among subgroups with lower baseline FIB‐4 index and HbA1c.ConclusionsIn this study, improvements in various measures, including ALT, the FIB‐4 index, GGT and albumin, were observed with SGLT2is compared with DPP4is, suggesting that SGLT2is may provide hepatoprotective benefits, including the prevention of liver fibrosis, in patients with T2D in Japan.