Background: Non-alcoholic fatty liver disease (NAFLD) is being increasingly recognized today as a potentially serious complication of diabetes, especially type 2. Aim and Objectives: To know the prevalence of NAFLD among diabetes mellitus. Materials and Methods: A prospective observation study was conducted, in Department of General medicine, CAIMS, Karimnagar, for the duration of one year. In which 50 patients were included after following inclusion and exclusion criteria and approved by institutional ethical committee. Results: The study group consisted of about 17 males and 23 females, between the age groups of 19 – 73 yrs, the average age was 49.23 yrs. The duration of diabetes in these patients ranged between 0 to 20 yrs. with the average duration being 5.17 yrs. Among all 42% of the patients were found with fatty liver, which was more common among female. Conclusion: Prevalence of NAFLD was observed mainly in patients with type 2 diabetes mellitus and also it was found more common among women compared to men. NAFLD was found to higher in patients who were overweight or obese, in those with central obesity.