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Background and Aim Non-alcoholic fatty liver disease (NAFLD) is associated with incident type 2 diabetes; however, the extent to which NAFLD may confer its risk remains uncertain, especially in Europeans. Emerging evidence suggests that sleep behaviors are linked to NAFLD and diabetes. We aimed to measure whether sleep behaviors modified the association between NAFLD and incident type 2 diabetes. Methods This prospective cohort study included 365 339 participants without type 2 diabetes at baseline in UK Biobank data. Five sleep behaviors, including sleep duration, insomnia, snoring, chronotype, and daytime sleepiness, were collected from the questionnaire. Overall sleep patterns were created by summing the five scores. Liver steatosis was based on the fatty liver index. Results During a median follow up of 11.0 years, we documented 8774 patients with incident type 2 diabetes. NAFLD was significantly associated with increased diabetes risk. Sleeping 7-8 h/day, no insomnia, no self-reported snoring, and no frequent daytime sleepiness were independently associated with incident type 2 diabetes, with a 20%, 18%, 16%, and 31% lower risk, respectively. About 33.8% and 33.5% of type 2 diabetes events in this cohort could be attributed to NAFLD and poor sleep pattern, respectively. Participants with NAFLD and poor sleep pattern showed the highest risk of type 2 diabetes (relative risk 3.17, 95% confidence interval 2.80, 3.59). Sleep pattern (healthy, intermediate, and poor) did not significantly modify the association between NAFLD and type 2 diabetes. However, when studying separately, we found a significant interaction between NAFLD and insomnia on the risk of incident type 2 diabetes (P for interaction = 0.003). Conclusion In this large prospective study, both NAFLD and some sleep behaviors were risk factors for type 2 diabetes. Although overall sleep pattern did not modify the association between NAFLD and type 2 diabetes, certain sleep behavior, especially insomnia, showed the modification effect.