Hepatocellular carcinoma (HCC) is the third most common cause of cancer-related deaths. In addition to hepatitis viral infections, several cohort studies have shown that diabetes mellitus is a risk factor of HCC, making the incidence alarming high. However, it has not been demonstrated directly how diabetes develops to HCC, because of its difficulty to follow changes of liver histology in diabetic populations. Here, we report that non-alcoholic steatohepatitis (NASH) is pivotal to link diabetes with HCC by establishing a novel, reproducible NASH–HCC model in mice. Neonatal male mice exposed to low-dose streptozotocin (STZ) developed liver steatosis with diabetes 1 week after feeding high-fat diet (HFD). Continuous HFD decreased hepatic fat deposit whilst increased lobular inflammation with foam cell-like macrophages, showing NASH pathology. In parallel with decreased phagocytosis of macrophages, fibroblasts accumulated to form “chicken-wired” fibrosis. All mice developed multiple HCC later. Female mice treated with STZ–HFD and male mice treated with STZ alone showed diabetes but never developed HCC by the absence of NASH-based fibrosis. Thus, the present study provides the evidence in novel mouse model that NASH-based fibrosis is an essential histological process for diabetic populations to accelerate the development of HCC.