Over the last decade, the link between nonalcoholic fatty liver disease (NAFLD) and insulin resistance has attracted considerable attention. Caused by chronic hyperglycemic stress, insulin resistance (IR) impairs insulin signal transduction and leads to the development of NAFLD. Jwa Kum Whan (JKW), a herbal formula in Traditional Korean Medicine, consists of two medicinal herbs that possess notable effects against hyperglycemia and IR. In this study, we sought to determine the pharmacological effects of JKW, and the mechanisms responsible, on hepatic steatosis in free fatty acids (FFAs)-stimulated HepG2 cells and in high-fat diet (HFD)-fed obese mice. Treatment with JKW significantly decreased intracellular lipid accumulation in vitro. Furthermore, JKW significantly triggered the phosphorylation of insulin receptor substrate-1 (IRS-1) and phosphoinositide 3-kinase (PI3K) and modulated glucose and lipid metabolism via an AMP-activated protein kinase (AMPK) signaling pathway. Analysis of serum parameters in HFD-fed mice showed that JKW improved glucose levels and insulin resistance index (HOMA-IR). In addition, JKW successfully reduced hepatic triglyceride (TG) and cholesterol accumulation. Our results suggest that JKW alleviates NAFLD by modulating the insulin signaling pathway and glucose metabolism. These findings provide a scientific rationale for the potential use of JKW for the treatment and prevention of NAFLD.