Non-alcoholic fatty liver disease (NAFLD) is one of the most serious global public health concerns. However, there are currently no effective drugs for treatment of this disease. Icariin (ICA), a small-molecule natural product extracted from Epimedium brevicornu Maxim, offers various pharmacological activities. In the present work, we wondered whether ICA can attenuate NAFLD in db/db mice treated with ICA for 8 weeks and how ICA exerts an influence on NAFLD. In db/db mice, ICA treatment had a robust effect on inhibition of lipogenesis associated with NAFLD amelioration by decreasing liver lipid deposition, together with ameliorating insulin sensitivity, glucose tolerance, and fasting serum glucose. Of note, ICA-treated rats showed a much higher concentration of icaritin (ICT) in plasma, a major metabolite of ICA, about 2000 times higher than that of ICA by liquid chromatography mass spectrometry (LC-MS). Interestingly, ICT, rather than ICA, can dramatically decrease hepatic lipogenesis-related markers in oleate acid/palmitate acid (OA/PA)-induced steatosis in primary hepatocytes (PH) and HepG2 cells, and hepatic lipid accumulation in db/db mice, demonstrating the inhibitory effect of ICT on lipogenesis. Mechanistically, we found that anti-lipogenic activities of ICT were related to reducing endoplasmic reticulum (ER) stress as evidenced by Western blot, qPCR, and other assays in thapsigargin (THP) induced-ER stress models. To our knowledge, this is the first report showing the unexpected and key role for ICT on the prevention of NAFLD in db/db mice through an ER stress mechanism.