Aims of the study were to compare liver markers in T2DM patients with that in non-diabetic healthy volunteers and also to find the correlation between insulin resistance (IR) and liver markers. The objective of the study was also to find out whether PON1 can be an alternative liver marker. The cross-sectional study was conducted in the Clinical Biochemistry laboratory. 114 type 2 DM patients in the age group 18-65 years, diagnosed as per ADA guidelines were recruited in the study.100 age and gender-matched non-diabetics, healthy volunteers or those having health packages were taken as controls. The blood sample was collected and fasting blood glucose, transaminases and Alkaline phosphatase, bilirubin (total and direct), total protein, albumin, and insulin were assayed. HOMA-IR was calculated. Statistical analysis was done by using SPSS 16. A significant elevation was seen in AST, ALT, ALP, GGT, TB, DB, TP, A: G ratio in diabetics. A lowered albumin and A: G ratio were observed in diabetics as compared to controls. Fasting insulin levels were 1.7 times higher in diabetics compared controls, suggesting hyperinsulinemia in cases. Homeostatic model for assessment of insulin resistance (insulin based) was 2.7 times greater in T2DM compared to controls. A significant positive correlation was found between insulin levels and total and direct bilirubin, (r=0.279, P=0.003, and r=0.233, P=0.014 respectively). ALP, total and direct bilirubin had a significant positive correlation with HOMA-IR (r=0.228, P=0.033,; r=0.231,P=0.030 ; r=0.242. P=0.023 respectively). A very significant negative correlation was found between albumin and HOMA- IR (r= -0.306, P=0.004). A significant positive correlation was observed between PON1 and HOMA-IR (P=0.000), PON and insulin (P=0.015). It can be concluded from that diabetics had high liver enzymes as compared to non-diabetics. An association was found between T2DM, liver markers, and IR. It was observed that PON1 was not a good liver marker in T2DM.