Purpose Osteocalcin may benefit nonalcoholic fatty liver disease (NAFLD). The present study aimed to explore the levels of serum osteocalcin in NAFLD in patients with type 2 diabetes mellitus (T2DM). Methods In total, 1026 inpatients diagnosed with T2DM were enrolled in the study. NAFLD was defined according to the working definition of the revised guidelines for the management of NAFLD published by the Chinese Liver Disease Association, and confirmed by abdominal ultrasonography. Results The current study found a NAFLD prevalence of 54% in the T2DM population. Subjects with NAFLD had lower concentrations of osteocalcin (8.28-13.99 ng/mL vs. 8.80-16.25 ng/mL, P = 0.001) but similar vitamin D, parathyroid hormone, beta-C-terminal telopeptide of type I collagen and procollagen type 1 N-peptide levels. Osteocalcin levels (OR: 0.956; 95% CI 0.926-0.987) were significantly associated with NAFLD. When all significant clinical indicators were analyzed together, increased BMI (OR: 1.120; 95% CI 1.065-1.178), fasting C-peptide (OR: 1.270; 95% CI 1.089-1.481) and triglycerides (OR: 1.661; 95% CI 1.284-2.148) were associated with a greater risk of NAFLD, while older age (OR: 0.967; 95% CI 0.948-0.986) and high osteocalcin levels (OR: 0.935; 95% CI 0.902-0.969) were related with a decreased risk of NAFLD. For every additional unit of osteocalcin, the patients received 7% deduced odds of NAFLD. Conclusion Low osteocalcin levels were associated with an increased risk for NAFLD in patients with T2DM.