Focal fatty change of the liver is a rare and poorly recognised entity. Most of the previously reported cases occurred in patients suffering from the usual steatogenic conditions, such as diabetes mellitus and obesity. The focality of the lesion, however, remains unexplained. The author reports a rare case of subcapsular focal fatty change of the liver occurring in a 60-year-old Chinese woman suffering from poorly controlled adult-onset diabetes mellitus. The underlying pathogenesis for the focal fatty change is thought to be related to local ischaemic effect secondary to diabetic angiopathy, which may further enhance the steatogenicity of diabetes mellitus. The recognition of focal fatty change of the liver is important in order to avoid misdiagnosis of other space-occupying lesions radiologically and macroscopically.