Abstract: Nonalcoholic fatty liver disease (NAFLD) and type 2 Diabetes Mellitus (T2DM) are highly prevalent diseases and are closely associated, with NAFLD being present in the majority of T2DM patients. In Asian traditional medicine, Mori Cortex is widely used for the treatment of diabetes and hyperlipidemia. However, whether it has a therapeutic effect on T2DM associated with NAFLD is still unknown. The present study showed that the oral treatment with Mori Cortex extract (MCE; 10 g·kg^-1·d^-1) lowered the blood lipid levels and reversed insulin resistance (IR) in high fat-diet/streptozotocin-induced type 2 diabetes in rats. The expression levels of sterol receptor element-binding protein-1c (SREBP-1c) and carbohydrate-responsive element binding protein (ChREBP), which are involved in steatosis in NAFLD rats, were measured in the liver samples. MCE decreased the protein and mRNA expression levels of SREBP-1c and ChREBP. In conclusion, down-regulation of SREBP-1c and ChREBP might contribute to the protective effect of MCE on hepatic injury and IR in the rats with T2DM associated with NAFLD.