Type 2 diabetes mellitus (T2DM) complicated with non-alcoholic fatty liver disease (NAFLD) is difficult to treat. The present study explored the efficacy of (liraglutide) Lira in treating T2DM complicated with NAFLD. A total of 127 patients suffering from T2DM complicated with NAFLD were enrolled in the present study, and randomly assigned to a Lira group (liraglutide injection: 0.6–1.2 mg/day, 12 weeks, n=52) or a Metformin (Met) group (oral metformin: 1000–1500 mg/day, 12 weeks, n=75). During the treatment phase, the values for fasting plasma glucose (FPG), 2 h plasma glucose (2hPG), glycated hemoglobin (HbA1c), aspartate aminotransferase (AST)/alanine aminotransferase (ALT), and adiponectin (APN) decreased in both the Lira and Met groups, and the levels of Δ2hPG, ΔAST/ALT, and ΔAPN in the Lira group were significantly lower than those in the Met group. The values for total cholesterol (TC), triglycerides (TG), low-and high-density lipoproteins (LDL and HDL), ALT, AST, weight, body mass index (BMI), waist to hip ratio (WHR), and C-reactive protein were markedly increased in both groups, and levels of ΔAST, ΔALT, Δweight, ΔBMI, ΔWHR, and ΔCRP (C-reactive protein) in the Lira group were significantly higher than those in the Met group. An analysis of treatment efficacy showed that liraglutide was better than metformin in its ability to significantly decrease the ALT levels in patients with combined T2DM and NAFLD. Furthermore, liraglutide was more effective than metformin at ameliorating the severity of T2DM complicated with NAFLD, and produced its effects by alleviating liver inflammation and improving liver function.