Background: Non-Alcoholic Fatty Liver Disease (NAFLD) is defined as excessive fat in the liver that is not caused by excessive alcohol consumption. Recent studies have shown that NAFLD can predict the onset of diabetes and vice versa, and that one ailment might act as a progression factor for the other. The paper aims to find out the various risk factors associated with developing Non-Alcoholic Fatty Liver Disease (NAFLD) in patients with type 2 Diabetes Mellitus to prevent both hepatic and systemic flares. Material and Method: A prospective cross-sectional observational study was conducted around 950 known patients of type 2 Diabetes Mellitus attending the outpatient Diabetes clinics during a period of May 2019 to May 2021 at NIMS Medical College & Hospital. Among them, 150 patients, willing to participate were selected as per inclusion and exclusion criteria. Results: A statistically significant difference was observed between the study groups in relation to Total Bilirubin, Direct Bilirubin, Indirect Bilirubin, serum proteins, Albumin, AST, ALT, Alkaline Phosphatase as the p-value calculated to be <0.05. Conclusions: The study showed people with high glycemic index have a higher chance of developing the disease. Thus tighter control of blood glucose level is the key to prevention. Obesity, uncontrolled diabetes, deranged lipid profile and abnormal liver enzymes are some of the risk factors for developing NAFLD. Thus screening must include all this risk factors and management strategies should address them separately.