To explore the mechanism of the Chinese medicine Cigu Xiaozhi prescription (, CGXZ) in the treatment of the non-alcoholic fatty liver disease (NAFLD) by detoxification and phlegm-reducing, the effect of CGXZ prescription on ceramide-mediated lipid apoptosis in Hep G2 cells with NAFLD. The experiment was randomly divided into 6 groups: normal control group, model group, CGXZ prescription medicated serum high, medium, and low dose groups, and pioglitazone positive control group. Using 500 μmol/L free fatty acid (FFA) mixture to induce Hep G2 cells to establish NAFLD cell model, respectively, with 2%, 4%, and 6% concentration of CGXZ prescription medicated serum intervention for 24 h. The changes in organelles and lipid droplet accumulation were observed under the electron microscope. Furthermore, TdT-mediated dUTP Nick-End Labeling method was used to assay hepatocyte apoptosis; Biochemical determination of glutamic-pyruvic transaminase, glutamic oxalacetic transaminase, triglycerides, and FFA levels in Hep G2 cells; the content of ceramide was determined by high-performance thin-layer chromatography. Finally, Western Blot and quantitative real-time polymerase chain reaction (qRT-PCR) were used to determine the protein and gene expression levels, such as inducible nitric oxide synthase (iNOS), nuclear factor κB (NF-κB), B cell lymphoma 2 (Bcl-2) and Bcl-2-associated X (Bax). Under the electron microscope, the cells in the model group showed moderate-to-severe steatosis, and apoptotic bodies could be seen. The model group had greater improvements in the apoptosis rate (P < 0.01), and the levels of ceramide C2 and FFA in the cytoplasm (P < 0.01) than the normal control group. The protein expressions of NF-κB, iNOS, and Bax were significantly up-regulated (P < 0.05), while the Bcl-2 had no significant change (P > 0.05). Compared with the model group, the levels of ceramide C2 and FFA (P < 0.01), the protein expressions of NF-κB, iNOS, and Bax (P < 0.05) in the CGXZ prescription treatment group and pioglitazone positive control group were significantly decreased; Only the Bcl-2 protein was significantly up-regulated in the high-dose Chinese medicine group (P < 0.05). The down-regulation of Bax mRNA expression in each Chinese medicine treatment group was significantly better than in the pioglitazone positive control group (P < 0.01). The CGXZ prescription, formulated with the method of detoxification and phlegm, can inhibit lipoapoptosis in the NAFLD cell model by down-regulating the levels of ceramide C2 and FFA, which may be achieved by regulating ceramide/iNOS/NF-κB signaling pathway.