Background: Non-alcoholic fatty liver disease (NAFLD) is a complex, multifactorial and multi-system disorder. It is one of the major contributors of liver disease worldwide. Among the many factors involved in the pathogenesis of NAFLD, free fatty acids (FFAs) such as palmitic acid induced lipotoxicity promotes steatosis, oxidative stress and insulin resistance that activate apoptotic cascades leading to tissue damage and inflammation. Since NAFLD is a multifactorial metabolic disorder, conventional target-based drug therapies have limited success. Therefore, the use of multicomponent ayurveda herbal formulations could be a promising alternative due to their multitargeted mechanisms of action. The present study investigates the effects and underlying mechanism of actions of an ayurveda formulation, Lodhrasavam (TDU-LS-1), in the in-vitro model of NAFLD. Methods: Lipotoxicity was induced in HepG2 cells by treating the cells with 1mM palmitic acid for 24 hrs followed by drug (TDU-LS-1) treatment for another 24 hrs. The effect of TDU-LS-1 on lipotoxicity was evaluated by MTT assay. The effect of TDU-LS-1 on steatosis was studied by estimating intracellular triglycerides, lipid droplets formation and expression of genes involved in lipid metabolism. Further, to examine the antioxidant activity, DPPH scavenging assay was performed. Results/discussion: TDU-LS-1 was found to increase the antioxidant activity in a concentration dependent manner with an IC50 of 16.45 μg GAE/ml. Palmitic acid induced lipotoxicity in HepG2 cells was reduced by lower concentrations of TDU-LS-1. Also, the results from triglyceride (TAG) assay, Oil-Red-O staining and BODIPY 493/503 confocal imaging suggest that TDU-LS-1 reduces the palmitate induced triglyceride deposition and lipid droplet accumulation in HepG2 cells. Further, the qRT-PCR analysis of TDU-LS-1 at a concentration of 32 μg/GAE revealed that it modulates the expression of SREBP, FASN, SCD1, ACOX, and PPARγ ; that are relevant in hepatic lipid metabolism. Our results suggest that TDU-LS-1 can reduce de novo lipogenesis, peroxisomal lipid peroxidation as well as lipotoxicity in the in vitro palmitate-induced NAFLD model in HePG2 cells.