Objective: The aim of the study was to determine whether metformin or vitamin E treatment for six months is effective in reducing body weight, blood pressure, and also ameliorating insulin resistance, adiponectin, and tumor necrosis factor (TNF)-alpha in obese adolescents with non-alcoholic fatty liver disease (NAFLD). Methods: Sixty-seven obese adolescents with liver steatosis (age range, 9 - 17 years) were included in the study. The metformin group received an 850-mg dose of metformin daily and the vitamin E group received 400 U vitamin E /daily, in capsule form for 6 months, plus an individually tailored diet, exercise, and behavioral therapy. Results: After 6 months later, there was a significant decline in body mass index, and fasting insulin and homeostatic model assessment (HOMA) values in all three groups. Moreover, in comparingson of changes in HOMA among the groups, the metformin- treated group showed significantly improved metabolic control and insulin sensitivity (HOMA) at the end of the study. There were no significant differences for changes of adiponectin, TNF-alpha, in all three groups after 6 months study. Conclusion: These data suggest that metformin treatment is more effective than dietary advice and vitamin E treatment in reducing insulin resistance, and also in ameliorating metabolic parameters such as fasting insulin and lipid levels, in obese adolescents having NAFLD.