Liraglutide, a glucagon-like peptide-1 (GLP-1) analogue, has been demonstrated to reduce hepatic steatosis. However, the mechanism of the lipid-lowering effect of liraglutide in the liver remains unclear. The aim of the present study was to investigate the beneficial effect of liraglutide on diet-induced non-alcoholic fatty liver disease (NAFLD) and the underlying mechanism in rats. NAFLD was induced in Sprague-Dawley rats by feeding a high fat and high cholesterol (HFHC) diet. Liraglutide (0.6 mg/kg body weight/d) was injected intraperitoneally to the rats subjected to HFHC diet four weeks before sacrificing the animals. Body and liver weight, fasting blood glucose (FBG), fasting insulin, serum aminotransferase (ALT) and lipid accumulation in the liver were determined. Markers of oxidative stress, such as malondialdehyde (MDA), free fatty acid (FFAs), superoxide dismutase (SOD), and pro-inflammatory cytokine tumor necrosis factor-α (TNF-α) were detected by colorimetric detection or enzyme-linked immunosorbent assay (ELISA). Serum and hepatic adiponectin were measured by ELISA. The expression of c-Jun N-terminal kinase-1 (JNK-1) and phosphorylated JNK-1 were examined by Western blotting. Liraglutide improved insulin resistance, decreased hepatic steatosis and reversed liver dysfunction. The hepatic levels of MDA, FFAs, and TNF-α were significantly decreased versus controls. Meanwhile, administration of liraglutide significantly increased SOD and adiponectin levels in the liver and inhibited the expression of JNK-1 and phosphorylated JNK-1 versus control rats. Liraglutide exerted anti-oxidative and anti-inflammatory effects in the liver and consequently reversed hepatic steatosis and insulin resistance. Such effects might be mediated by the elevation of adiponectin levels and the inactivation of JNK-1.