The prevalence of diabetes is increasing world over and is expected to affect 57 million adults in india by 2025. Apart from kidney, eye, heart and blood vessels, liver is also indirectly related with diabetes mellitus. Virtually the entire spectrum of liver disease is seen in patients with type 2 diabetes Nearly 70-80% of the diabetic subjects have been reported to have hepatic fat accumulation, referred to as NAFLD.5 There are not enough studies done on the hepatic status of diabetic patients in our country. Hence this study aims to describe the hepatic profile of type 2 diabetic patients. This study aims to correlate the clinical, biochemical, sonological profile of fatty liver in non alcoholic patients with type 2 diabetes mellitus.This study was done at the Kamineni Institute Of Medical Sciences, Narketpally. One hundred and eighteen type 2 diabetic patients diagnosed according to the American Diabetic Association criteria, newly diagnosed or on follow- up were included in the study. Conclusion: Non invasive methods are the need of the hour for early and wide screening to detect this disease. Persons with higher BMI are at greater risk of developing NAFLD.No significant correlation was found between age of patient, duration of diabetes fasting blood sugar levels and NAFLD.Liver enzymes were thought to be a potential non invasive strategy for early detection of this disease, but the present study did not find any correlation of the level of liver enzymes and the degree of fatty liver in Indian patients.