Nonalcoholic fatty liver disease (NAFLD) is the most common cause of chronic liver disease worldwide. Oxidative stress is one of the main inducers of NAFLD. Atractylodin (ART), a major active ingredient of Atractylodes lancea, possesses potential antioxidant and anti-inflammatory activity in many types of disease. In the current study, the underlying mechanism by which ART alleviates the progression of NAFLD was explored. The function of ART in facilitating NAFLD was investigated in vitro and in vivo. Functionally, ART attenuated high-fat diet (HFD)-induced NAFLD in mice and palmitic acid (PA)-induced oxidative stress in HepG2 cells. Furthermore, our data verified that ART attenuated HFD-induced NAFLD by inhibiting ferroptosis of hepatocyte cells, as evidenced by decreased Fe2+ concentration, reactive oxygen species (ROS) level, malondialdehyde (MDA) content, and increased glutathione (GSH) content. The protective effect of ART on the cell viability of hepatocytes was blocked by a specific ferroptosis inhibitor (ferrostatin-1). Mechanistically, ART treatment promoted the translocation of nuclear factor erythroid 2-related Factor 2 (NFE2L2/NRF2) and thus increased glutathione peroxidase 4 (GPX4), ferritin heavy chain 1 (FTH1), and solute carrier family 7 member 11 (SLC7A11) expression. Taken together, ART alleviates NAFLD by regulating Nrf2-mediated ferroptosis.