Pink lotus essential oil (PLEO) is the volatile components extracted from lotus flowers and there are few relevant research. The purpose of this study was to observe the effect of PLEO on NAFLD in vitro model and its possible mechanism. The ingredients of PLEO were determined by gas chromatography-mass spectrometry (GS-MS) and its lipid-lowering and hepatoprotective activities were investigated. HepG2 cells were treated with free fatty acid (FFA) to establish a cell model of NAFLD. Cell viability was evaluated by 3-(4,5-dimethyl thiazol-2-yl)-2,5-diphenyl tetrazolium bromide (MTT) method. Total cholesterol (TC), triglyceride (TG), tumor necrosis factor-α (TNF-α), interleukin-1β (IL-1β), and interleukin-6 (IL-6) were determined by Enzyme-Linked Immune Sorbent Assay (ELISA). Oil red O staining was performed to observe the lipid accumulation in the HepG2 cells. Lipid metabolism enzymes including fatty acid synthase (FAS), acetyl-coA carboxylase (ACC), stearoyl-CoA desaturase 1 (SCD-1), and carnitine palmitoyltransferase-1 (CPT-1), insulin signaling pathways including phosphatidylinositol 3 kinase (PI3K) and protein kinase B Akt, inflammatory signaling pathways such as nuclear factor kappa-B (NF-κB), were determined by Western blotting. There were 46 components determined in PLEO with many terpenoids compounds. PLEO decreased TC and TG contents in the FFA-treated HepG2 cells. Furthermore, PLEO inhibited TNF-α, IL-6 and IL-1β excretion, decreased NF-κB, FAS, ACC and SCD-1 while increased phosphorylation of NF-κB, PI3K, Akt, and CPT-1 expression. It is the first time to reveal that PLEO alleviates FFA-induced steatosis in HepG2 cells by regulating lipid metabolism, inhibiting inflammatory response, and improving insulin sensitivity.