Type 2 diabetes mellitus (T2DM) and non-alcoholic fatty liver disease (NAFLD) are two cardinal manifestations of the metabolic syndrome, which is becoming a growing global pandemic and a health care burden. They constitute a pathogenetic duo, with complex interplay through interrelated, but still partly understood, pathophysiological pathways, which mainly involve lipid toxicity (expressed through increased hepatic de novo lipogenesis, hepatic and peripheral insulin resistance, upregulated lipolysis, lipoprotein abnormalities, hyperinsulinemia), impaired autophagy, mitochondrial dysfunction, endoplasmic reticulum stress, adipose tissue dysfunction with a consequent latent inflammatory state, inflammasome activation, genetic and epigenetic factors, altered gut microbiota and finally dietary factors. In this review, based on data from recent studies and focusing mainly on common molecular mechanisms, we will highlight the common pathophysiological grounds and the interplay between NAFLD and T2DM.