Nonalcoholic fatty liver disease (NAFLD) results from an abnormal accumulation of lipids within hepatocytes, and is commonly associated with obesity, insulin resistance, and hyperlipidemia. Metformin is commonly used to treat type 2 diabetes mellitus and, in recent years, it was found to play a potential role in the amelioration of NAFLD. However, the mechanisms underlying the protective effect of metformin against NAFLD remain largely unknown. Transcription factor EB (TFEB) is a master transcriptional regulator of lysosomal biogenesis and autophagy and, when activated, is effective against disorders of lipid metabolism. However, the role of TFEB in hepatic steatosis is not well understood. In this report, we demonstrate that the activity of TFEB is reduced in the liver of mice fed a high-fat diet. Metformin treatment significantly reverses the activity of TFEB, and the protective effect of metformin against hepatic steatosis and insulin resistance is dependent on TFEB. We show that metformin-induced autophagy is regulated by TFEB, and our findings reveal that TFEB acts as a mediator, linking metformin with autophagy to reverse NAFLD, and highlight that TFEB may be a promising molecular target for the treatment of NAFLD.