Introduction: The prevalence of nonalcoholic fatty liver disease (NAFLD) in patients with type 2 diabetes (T2D) is high and it is associated with poor prognosis. Hepatic steatosis results as a consequence of excessive hepatic lipid accumulation which correlates with insulin resistance and lipotoxicity, with subsequent oxidative stress, inflammation, apoptosis and fibrosis. Areas covered: This article presents the main pathophysiologic mechanisms and currently available drugs evaluated for their therapeutic effects on NAFLD/nonalcoholic steatohepatitis (NASH) and drugs under development that target relevant pathogenetic pathways. However, to date there is no particular drug approved for treatment of NAFLD in patients with T2D. Expert commentary: Early recognition and intervention are essential to ameliorate disease progression. Specific recommendations are still needed for NAFLD/NASH screening and diagnosis and therapeutic algorithm in patients with T2D. Lifestyle optimization with significant weight loss is a key intervention in patients with NAFLD and T2D. Pioglitazone, liraglutide, vitamin E, OCA and pentoxifylline have proven some histological improvements in NASH and omega 3-PUFAs were shown to decrease liver fat, but no specific recommendation can be made for treatment of NASH. Perhaps a combination of agents that target different pathogenic pathways are needed to better control disease progression, but more robust evidence for these agents is still needed.