Non-alcoholic fatty liver disease (NAFLD) affects more than 70% of patients with type 2 diabetes mellitus (T2DM) and has become one of the most common metabolic liver diseases worldwide. To date, treatments specifically targeting NAFLD do not exist. Oxidative stress and insulin resistance have been implicated in the pathogenesis of NAFLD in diabetes. Accordingly, the goal of this present study was to determine whether Ellagic acid (EA), a natural antioxidant polyphenol found in berries and nuts, mitigates hepatic oxidative stress and insulin resistance in T2DM rats, and thus alleviates NAFLD. Using adult female Goto Kakizaki (GK) rats, a non-obese and spontaneous model of T2DM, we found that EA treatment significantly lowered fasting blood glucose and reduced insulin resistance, as shown by a 21.8% reduction in the homeostasis model assessment index of insulin resistance (HOMA-IR), while triglyceride and total cholesterol levels remained unchanged. Increased hepatic lipid accumulation and oxidative stress present in diabetic GK rats was markedly reduced with EA treatment. This effect was associated with a downregulation of the NADPH oxidase subunit, p47-phox, and overexpression of NF-E2-related factor-2 (NRF2). Moreover, EA was able to decrease the hepatic expression of hypoxia-inducible factor (HIF-α), a transcription factor linked to hypoxia and hepatic steatosis. We further showed that EA treatment activated an insulin signaling pathway in the liver, as evidenced by increased levels of phosphorylated Akt (Ser 473). In conclusion, our results demonstrate that EA diminishes blood glucose levels and potently suppress NAFLD in diabetic rats via mechanisms that involve reductions in p47-phox and HIF-α, upregulation of NRF2 and enhancement of the Akt signaling pathway in the liver. Together, these results reveal that EA improves hepatic insulin sensitivity and lipid metabolism as a result of its antioxidant effects. This implies an anti-diabetic effect of EA with beneficial effects for the treatment of hepatic complications in T2DM.