Background: Nonalcoholic fatty liver disease (NAFLD) is a group of disorders characterized histologically by macrovesicular hepatic steatosis that affects people who do not consume alcohol in proportions that are typically thought to be damaging to the liver. The present study was conducted to assess prevalence of non- alcoholic fatty liver disease and its correlation with coronary risk factors in patients with type 2 DM. Materials & Methods: 120 patients of type 2 diabetes of both genders were divided into 2 groups of 60 each. Group I was NAFLD- patients with USG evidence of fatty changes in the liver and group II was non-NAFLD- patients without any USG evidence of fatty changes in the liver. The history of duration of diabetes was recorded. Results: In group I, males were 32 and females were 28 and in group II males were 34 and females were 26. In group I and group II, hypertension was seen in 42 and 21, smoking in 45 and 18, BMI >25 kg/m² in 36 and 7, HbA1c (>7%) in 52 and 16, metabolic syndrome in 42 and 20, LDL cholesterol >160 mg/dl in 17 and 34, HDL (<50 mg/dl in females and <40 mg/dl in males) in 55 and 37, total cholesterol >200 mg/dl in 53 and 32, triglyceride >150 mg/dl in 58 and 27, ALT (> 50 IU/l in males and >35 IU/l in females) in 42 and 12 and AST (>40 IU/l) in 48 and 17 patients in group I and II respectively. The difference was significant (P< 0.05). Conclusion: When type 2 diabetes is present, the prevalence of non-alcoholic fatty liver disease (NAFLD) rises significantly. In comparison to patients without NAFLD, obesity, hypertension, and dyslipidemia were much more common in those with NAFLD.