Thyroid function and type 2 diabetes mellitus (T2DM) are both associated with increased risks of adverse clinical outcomes in nonalcoholic fatty liver disease (NAFLD). Our study is aimed at evaluating the association between thyroid function and NAFLD in T2DM patients with normal thyroid function (euthyroid) and analyzing the potential effects of metformin on the pathological process. Overall, 369 T2DM patients were enrolled between July 2017 and September 2018 and stratified into NAFLD and non-NAFLD groups. Data on age, gender, body mass index (BMI, kg/m2), metformin use, and basal metabolic rate (BMR) were obtained from participants’ records. All patients were tested for biochemical markers, indexes of glucose metabolism, lipid metabolism, bone metabolism, and thyroid function at baseline. Multivariate analyses detected increased odds of NAFLD among individuals with T2DM per unit increase in their BMI and free triiodothyronine (FT3) and thyroid stimulating hormone (TSH); the odds ratios (OR) were 1.25, 3.02, and 1.58, respectively (all p<0.05). Positive correlations were detected between alanine aminotransferase (ALT) and FT3 (r=0.221, p=0.010), and negative correlations were noted between TSH and BMR (r=−0.618, p<0.001) and between BMR and FT3 (r=−0.452, p<0.001) in T2DM subjects with NAFLD. A significant difference in serum FT3 (t=2.468, p=0.0167) and TSH (t=2.658, p=0.010) levels was found between obese individuals with NAFLD who used and did not use metformin. The pathological mechanism of T2DM complicated by NAFLD in euthyroid patients may be associated with insulin resistance and a thyroid hormone resistance-like manifestation, i.e., relevant hypothyroidism. Metformin can potentially decrease the double-resistance situation, especially in obese individuals.