Non-alcoholic fatty liver (NAFL) is a prevalent hepatic disorder of global significance that can give rise to severe complications. This research endeavor delves into the potential of nano-liposomal formulated Lycopene (Lip-Lyco) in averting the development of obesity and insulin resistance, both of which are major underlying factors contributing to NAFL. The investigation further scrutinizes the impact of Lip-Lyco on intricate cellular pathways within the liver tissue of rats induced with NAFL, specifically focusing on the progression of steatosis and fibrosis. To establish an obesity-NAFL model, twenty rats were subjected to a high-fat diet (HFD) for a duration of twelve weeks, after which they received an oral treatment of Lip-Lyco (10mg/kg) for an additional eight weeks. Another group of sixteen non-obese rats were subjected to treatment with or without Lip-Lyco, serving as a control for comparison. Results: The rats on a hypercaloric diet had high body mass index (BMI) and insulin resistance, reflected in disturbed serum adipokines and lipid profiles. Oxidative stress, inflammation, and apoptosis were evident in hepatic tissue, and the autophagic process in hepatocytes was inhibited. Additionally, the hedgehog pathway was activated in the liver tissue of NAFL group. Lip-Lyco was found to counteract all these aspects of NAFL pathogenesis. Lip-Lyco exhibited antioxidant, anti-inflammatory, hypoglycemic, antiapoptotic, autophagy-inducing, and Hedgehog signaling inhibitory effects. This study concludes that Lip-Lyco, a natural compound, has promising therapeutic potential in combating NAFLdisease. However, more experimental and clinical studies are required to confirm the effectiveness of lycopene in treating NAFLdisease.