In the past thirty years, childhood obesity rates have risen significantly worldwide, affecting over 340 million children in affluent nations. This surge is intricately tied to metabolic disorders, notably insulin resistance, type 2 diabetes mellitus (T2DM), and the continually evolving spectrum of metabolic-associated (dysfunction) steatotic liver disease (MASLD). This review underscores the alarming escalation of childhood obesity and delves comprehensively into the evolving and dynamic changes of nomenclature surrounding diverse conditions of hepatic steatosis, from the initial recognition of non-alcoholic fatty liver disease (NAFLD) to the progressive evolution into MASLD. Moreover, it emphasizes the crucial role of pediatric endocrinologists in thoroughly and accurately investigating MASLD onset in children with T2DM, where each condition influences and exacerbates the progression of the other. This review critically highlights the inadequacies of current screening strategies and diagnosis, stressing the need for a paradigm shift. A proposed solution involves the integration of hepatic magnetic resonance imaging assessment into the diagnostic arsenal for children showing insufficient glycemic control and weight loss post-T2DM diagnosis, thereby complementing conventional liver enzyme testing. This holistic approach aims to significantly enhance diagnostic precision, fostering improved outcomes in this vulnerable high-risk pediatric population.