Abstract： Objective To observe the effect of rosiglitazone on nonalcoholic fatty liver disease (NAFLD) in type 2 diabetic patients. Methods The 95 newly diagnosed type 2 diabetics with CT scan displayed NAFLD were enrolled and divided into three groups randomly:(1) rosiglitazone group (R group) were treated for six months with rosiglitazone,4mg once daily,(2) metformin group (M group) were treated with metformin,0.5g three times daily,(3) control group were treated with other medicines except for thiazolidinedione and metformin. Results The CT value ratio of liver to spleen,disappearance rate of fatty liver and ISI were much higher in R group than in M group,while those were much higher in M group than in control group. HOMA-IR was lowest in R group and highest in control group. FIns in R group and M group was much lower than in control group. Conclusions Rosiglitazone can treat NAFLD,increase the insulin sensitivity and improve the insulin resistance in T2DM patients. The therapeutic effects of rosiglitazone are better than metformin. Rosiglitazone has no damage on liver function in our study