The modified Longdan Xiegan Tang (mLXT) has been used clinically for various neuropsychiatric disorders and liver diseases. The use of antipsychotics is associated with nonalcoholic fatty liver disease. To investigate the effect and underlying mechanisms of mLXT on antipsychotic-induced fatty liver. The representative active components in the formula were identified and quantified by a HPLC method. Fatty liver in male rats was induced by olanzapine (5 mg/kg) (p.o., × 8 weeks), and the rats were co-treated with mLXT extract (50 and 500 mg/kg). Blood and liver variables were determined enzymatically or histologically. Gene/protein expression was analyzed by real-time PCR and Western blot. Treatment of rats with mLXT decreased olanzapine-induced increases in hepatic triglyceride content, cell vacuolar degeneration and Oil Red O-stained area, accompanied by suppression of olanzapine-stimulated hepatic mRNA and/or protein overexpression of sterol regulatory element-binding protein (SREBP)-1c, and its downstream lipogenic enzymes for de novo lipogenesis. Besides, mLXT also activated hepatic expression of peroxisome proliferator-activated receptor-alpha and its target genes associated with fatty acid beta-oxidation, phosphorylated Thr172 in AMP-activated protein kinase (AMPK)-alpha (the upstream enzyme of SREBP-1c and PPAR-alpha), and its ratio to total AMPK-alpha. The present results suggest that chronic treatment with mLXT ameliorates olanzapine-induced fatty liver by regulating hepatic de novo lipogenesis- and fatty acid beta-oxidation-associated gene expression mediated by SREBP-1c and PPAR-alpha, respectively, through activation of AMPK-alpha. Our findings provide the evidence that supports clinical use of the formula for antipsychotic medication-induced fatty liver. Copyright © 2019 Elsevier B.V. All rights reserved.