NO-1886 is a lipoprotein lipase (LPL) activator. Administration of NO-1886 results in an increase in plasma high-density lipoprotein cholesterol (HDL-C) and a decrease in plasma triglyceride (TG) levels. The aim of this study was to ascertain whether NO-1886 improves fatty liver caused by high-fat feeding in streptozotocin (STZ)-induced diabetic rats. Administration of NO-1886 resulted in increased plasma HDL-C levels and decreased TG levels without affecting total cholesterol and glucose levels in the diabetic rats. NO-1886 dose-dependently decreased liver TG contents and cholesterol contents, resulting in improvement of fatty liver. NO-1886 also reduced plasma aspartate aminotransferase (AST) and alanine aminotransferase (ALT) that accompany fatty liver. The liver cholesterol contents were inversely correlated with plasma HDL-C levels (r = -0.5862, P <.001) and were positively correlated with plasma TG levels (r = 0.4083, P <.003). The liver TG contents were inversely correlated with plasma HDL-C levels (r = -0.6195, P <.001) and were positively correlated with plasma TG levels (r = 0.5837, P <.001). There was no correlation between plasma cholesterol levels, and cholesterol and TG contents in liver. These results indicate that reducing plasma TG levels and elevating in HDL-C levels may result in improving fatty liver.