We sought to characterise the impact of GLP-1RA on adverse liver outcomes (ALO) among patients with alcohol-associated liver disease (ALD) and Type 2 diabetes mellitus (T2DM). Patients with T2DM newly diagnosed with ALD between 2013 and 2020 were identified using IBM MarketScan database and were categorised by GLP-1RA exposure. Overlap propensity score weighting (OPSW) followed by Poisson regression models was used to analyse adjusted risk of ALO, a composite endpoint defined by first occurrence of hepatic decompensation (HD), portal hypertension (PH), hepatocellular carcinoma (HCC) or liver transplantation (LT) relative to GLP-1RA. Among 14 730 patients, most individuals were male (n = 9752, 66.2%) with median age of 57 (IQR 52-61) years; 2.2% (n = 317) of patients had GLP-1RA exposure. Overall, 32.0% (n = 4717) of patients experienced HD, 15.9% (n = 2345) had PH, 3.8% (n = 563) developed HCC, while 2.5% (n = 374) underwent transplantation. Non-GLP-1RA patients had higher incidence of HD (32.2% vs. 22.4%) and HCC (3.9% vs. 0.3%) versus patients taking GLP-1RA (both p < 0.001); in contrast, there was no difference in incidence of PH (14.5% vs. 16.0%) and LT (1.3% vs. 2.6%) (both p > 0.05). After OPSW, overall incidence of ALO was lower in GLP-1RA cohort (GLP-1RA: 12.0%, 95%CI 9.0-16.0 vs. non-GLP-1RA: 21.0%, 95%CI 20.0-22.0) with an absolute incidence risk reduction of 9.0% (95%CI 3.0%-15.0%) associated with GLP-1RA. GLP-1RA was most strongly associated with lower likelihood of HD with reduced adjusted incidence rate of 0.56 (95%CI 0.36-0.86) relative to non-GLP-1RA individuals. GLP-1RA may have a hepatoprotective impact among patients with ALD and T2DM.