To investigate the protective effects of Chinese medicine formulation Chaihu Shugan San (, CHSGS) on nonalcoholic fatty liver disease (NAFLD) in rats with insulin resistance (IR) and its molecular mechanisms. Male Sprague-Dawley rats were randomly divided into six groups: the control group, the model group, Dongbao Gantai group (, DBGT, 0.09 g methionine/kg), CHSGS high-dose group (CHSG-H, 12.6 g crude drug/kg), CHSGS medium-dose group (CHSG-M, 6.3 g crude drug/kg), and CHSGS low-dose group (CHSG-L, 3.15 g crude drug/kg). After establishing the NAFLD rat model and treatment for 8 weeks, total cholesterol (TC), triglyceride (TG), high-density lipoprotein cholesterol (HDL-C), free fatty acid (FFA), fasting blood glucose (FBG), fasting insulin (FINS) contents in blood serum, and TC, TG contents in the hepatic homogenate were measured by an automatic biochemical analyzer, and a homeostasis model assessment was applied to assess the status of IR, insulin sensitivity index (ISI), and homeostasis model assessment for insulin secretion (HOMA-IS). The expression levels of adiponectin and leptin mRNA in liver tissue were analyzed by reverse transcription polymerase chain reaction. Pathological changes of livers were observed by hematoxylin-eosin staining of paraffin section. Compared with the model group, the serum levels of TC, TG, FFA, FBG, FINS, IRI, ISI, and the liver levels of TC and TG in CHSG-H, CHSG-M, CHSG-L groups showed significant declines (P<0.01 or P<0.05); the serum levels of HDL-C, HOMA-IS were significantly increased (P<0.01 or P<0.05); the expression of leptin mRNA was dramatically decreased and the expression of adiponectin mRNA was increased in the hepatic tissue (P<0.01 or P<0.05). The fatty deposition of liver cells could also be alleviated. CHSGS could up-regulate the expression of adiponectin mRNA and down-regulate the expression of leptin mRNA on the liver, suggesting the CHSGS had positive therapeutic effect on NAFLD in rats with IR.