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Nonalcoholic fatty liver disease (NAFLD) is the most common cause of chronic liver disease in the world. NAFLD is a hepatic manifestation of insulin resistance, the core pathophysiology of diabetes. Multiple clinical studies show that diabetes increases the risk of liver disease progression and cirrhosis development in patients with NAFLD. Diabetes has causal associations with many different cancers, including hepatocellular carcinoma (HCC). More recent studies demonstrate that diabetes increases the risk of HCC in patients with underlying NAFLD cirrhosis, confirming the direct hepatocarcinogenic effect of diabetes among cirrhosis patients. Diabetes promotes hepatocarcinogenesis via the activation of inflammatory cascades producing reactive oxygen species and proinflammatory cytokines, leading to genomic instability, cellular proliferation, and inhibition of apoptosis. Given the global increase in the burden of NAFLD and HCC, high-risk patients such as older diabetic individuals should be carefully monitored for HCC development. Future larger studies should explore whether the effect of diabetes on HCC risk in NAFLD cirrhosis is modifiable by the type of antidiabetic medication and the effectiveness of diabetes control.