Nonalcoholic fatty liver disease (NAFLD) is closely associated with type 2 diabetes mellitus. We investigated whether the deposition of fat in the liver is associated with glycemic abnormalities and evaluated the contribution of the liver fat content (LFC) to the impaired glucose regulation. We conducted a community-based study among 2836 residents (1018 males and 1818 females) without prior known diabetes mellitus from the Changfeng Study who were at least 45 years old. A standard interview, anthropometrics and laboratory parameters were performed for each participant. The standardised ultrasound hepatic-renal echo-intensity and hepatic echo-intensity attenuation rate were used to assess the LFC. The cohort was stratified according to the quintiles for LFC. Two-hour glucose and fasting blood glucose increased across the LFC quintiles after adjustment for age and gender. LFC increased continuously among glucose categories after adjustment for age and gender (NGT: 7.7±0.3%, IFG: 10.0±0.8%, IGT: 11.8±0.5%, IFG+IGT: 11.7±0.9%, new- DM: 12.4±0.6%, P<0.001). By logistic regression analysis, 1% LFC increment independently predicted prediabetes and diabetes (OR 1.032, 1.019-1.045, P<0.001; 1.021, 1.005-1.037, P = 0.012, respectively) after adjustment for all potential confounders. Furthermore, participants with LFC higher than 10% had higher odds ratios of impaired glucose regulation as compared with those with LFC below 10% in fully adjusted logistic models. These results suggest that the LFC is strongly associated with impaired glucose regulation in the Chinese population, and that an even slightly elevated LFC is associated with increased glucose dysregulation.