Hepatotoxicity is one of the significant side effects of chronic diabetes mellitus (DM) besides nephrotoxicity and pancreatitis. The management of this disease is much dependent on the restoration of the liver to its maximum functionality, as it is the central metabolic organ that gets severely affected during chronic diabetes. The present study investigates if the silver nanoparticles decorated with curcumin (AgNP-Cur) can enhance the efficacy of metformin (a conventional antidiabetic drug) by countering the drug-induced hepatoxicity. Swiss albino rats were categorized into six treatment groups (n = 6): control (group I without any treatment), the remaining five groups (group II, IV, V, VI) were DM-induced by streptozocin. Group II was untreated diabetic positive control, whereas groups III was administered with AgNP-cur (5 mg/kg). Diabetic group IV treated with metformin while V and VI were treated with metformin in a combination of the two doses of NPs (5 and 10 mg/kg) according to the treatment schedule. Biochemical and histological analysis of blood and liver samples were conducted after the treatment. The groups V and VI treated with the combination exhibited remarkable improvement in fasting glucose, lipid profile (HDL and cholesterol), liver function tests (AST, ALT), toxicity markers (GGT, GST and LDH), and redox markers (GSH, MDA and CAT) in comparison to group II in most of the parameters. Histological evaluation and comet assay further consolidate these biochemical results, pleading the restoration of the cellular structure of the target tissues and their nuclear DNA. Therefore, the present study shows that the NPs can enhance the anti-diabetic action by suppression of the drug-mediated hepatoxicity via relieving from oxidative stress, toxic burden and inflammation.