Aims/IntroductionTo explore relationships between polyunsaturated fatty acids (PUFA) and non‐alcoholic fatty liver disease (NAFLD) in patients with type 2 diabetes, and whether insulin action has an interactive effect with PUFA on NAFLD progression.Materials and MethodsWe extracted clinical and omics data of 482 type 2 diabetes patients from a tertiary hospital consecutively from April 2018 to April 2019. NAFLD was estimated by ultrasound at admission. Plasma fasting n3 and n6 fatty acids were quantified by liquid chromatography–tandem mass spectrometry analysis. Restricted cubic spline nested in binary logistic regression was used to select the cut‐off point, and estimate odds ratios and 95% confidence intervals. Additive interactions of the n6 : n3 ratio with insulin action for NAFLD were estimated using relative excess risk due to interaction, attributable proportion due to interaction and synergy index. Relative excess risk due to interaction >0, attributable proportion due to interaction >0 or synergy index >1 indicates biological interaction. Spearman correlation analysis was used to obtain partial correlation coefficients between PUFA and hallmarks of NAFLD.ResultsOf 482 patients, 313 were with and 169 were without NAFLD. N3 ≥800 and n6 PUFA ≥8,100 μmol/L were independently associated with increased NAFLD risk; n6 : n3 ratio ≤10 was associated with NAFLD (odds ratio 1.80, 95% confidence interval 1.20–2.71), and the effect size was amplified by high C‐peptide (odds ratio 8.89, 95% confidence interval 4.48–17.7) with significant interaction. The additive interaction of the n6 : n3 ratio and fasting insulin was not significant.ConclusionDecreased n6 : n3 ratio was associated with increased NAFLD risk in type 2 diabetes patients, and the effect was only significant and amplified when there was the co‐presence of high C‐peptide.