There are limited studies investigating the association between type 2 diabetes mellitus (T2DM) and non-alcoholic fatty liver disease (NAFLD) in the region of Bihar, India. To estimate the prevalence of NAFLD in persons with newly diagnosed T2DM in the population of North Bihar, India. This single centre cross-sectional study was undertaken in the Research Centre for Diabetes Hypertension and Obesity, Samastipur, Bihar, India. Data were collected from persons newly diagnosed with T2DM or those diagnosed within 6 months of when the study was conducted between December 2022 to May 2023. A total of 148 people with newly diagnosed T2DM were included (median age 47 years, 46.6% female) and 109 patients with liver disease on ultrasound evaluation. The persons with liver disease consumed more fats and oils (88.1% vs 74.4%, P = 0.042) and they had significantly greater body mass index (27.4 vs 23.0, P < 0.001), waist circumference (37 vs 33, P < 0.001), and waist-to-hip ratio (1.00 vs 0.70, P = 0.025). Females were associated with greater liver disease [odds ratio (OR): 3.09, 95% confidence interval (CI): 1.09-8.80, P = 0.32]. Waist circumference (OR: 1.42, 95%CI: 1.22-1.66, P < 0.001) and low-density lipoprotein cholesterol (OR: 1.01, 95%CI: 1.01-1.02, P = 0.048) were associated with any liver disease. The factors most associated with grade 2/3 liver disease was right upper quadrant pain or heaviness (OR: 5.22, 95%CI: 1.40-19.41, P = 0.14), greater income (OR: 3.58, 95%CI: 1.28-10.04, P = 0.015) and waist circumference (OR: 1.31, 95%CI: 1.02-1.69, P = 0.036). NAFLD is common in new/recently diagnosed T2DM and disease burden is high and common among patients who are either high consumers of fats and oils or have obesity-associated markers.