The prevalence of Non Alcoholic Fatty Liver Disease (NAFLD) is increasing globally. Terminalia arjuna W. & Arn. (Combretaceae) is an endemic tree found in India and Sri Lanka and used traditionally for its cardioprotective and hepatoprotective effects. Arjunolic acid (AA) is an oleanane triterpenoid found mainly in the heartwood of T. arjuna. This study was aimed to evaluate the hepatoprotective effect of AA using cellular and rodent models of NAFLD. AA was isolated from the ethyl acetate extract of the heartwood of T. arjuna. The structure of AA was confirmed by physical and spectroscopic data. Steatosis was induced in HepG2 cells using palmitate-oleate mixture and the effects of AA on triglyceride accumulation and lipotoxicity were assessed. In vivo effect of AA on NAFLD was assessed using HFD fed rats. The treatment with AA did not affect the cell viability upto 100 μM and showed GI₂₅ value of 379.9 μM in HepG2 cells. The treatment with AA significantly lowered the ORO concentration by 35.98% and triglyceride accumulation by 66.36% at 50 μM concentration (P < 0.005) compared to the vehicle treated group. The treatment with AA also reduced the leakage of ALT and AST by 61.11 and 48.29% in a significant manner (P < 0.005). The in vivo findings clearly demonstrated that the animals treated with AA at 25 and 50 mg/kg concentrations showed a significant decrease in the levels of transaminases, phosphatase and GGT (P < 0.005). In the liver, the expression of PPARα and FXRα expressions were upregulated, while PPARγ expression was downregulated by the treatment with AA. The liver histology of the animals showed reduction in steatosis and MNC infiltration. These preliminary evidences suggested that AA might be a promising lead to treat NAFLD. Future robust scientific studies on AA will lead to tailoring it for the treatment of NAFLD.