Nonalcoholic fatty liver disease (NAFLD) rapidly becomes the leading cause of end-stage liver disease or liver transplantation. Nowadays, there has no approved drug for NAFLD treatment. Diosgenin as the structural analogue of cholesterol attenuates hypercholesterolemia by inhibiting cholesterol metabolism, which is an important pathogenesis in NAFLD progression. However, there has been no few report concerning its effects on NAFLD so far. Using a high-fat diet & 10% fructose-feeding mice, we evaluated the anti-NAFLD effects of diosgenin. Transcriptome sequencing, LC/MS analysis, molecular docking simulation, molecular dynamics simulations and Luci fluorescent reporter gene analysis were used to evaluate pathways related to cholesterol metabolism. Diosgenin treatment ameliorated hepatic dysfunction and inhibited NAFLD formation including lipid accumulation, inflammation aggregation and fibrosis formation through regulating cholesterol metabolism. For the first time, diosgenin was structurally similar to cholesterol, down-regulated expression of CYP7A1 and regulated cholesterol metabolism in the liver (p < 0.01) and further affecting bile acids like CDCA, CA and TCA in the liver and feces. Besides, diosgenin decreased expression of NPC1L1 and suppressed cholesterol transport (p < 0.05). Molecular docking and molecular dynamics further proved that diosgenin was more strongly bound to CYP7A1. Luci fluorescent reporter gene analysis revealed that diosgenin concentration-dependently inhibited the enzymes activity of CYP7A1. Our findings demonstrated that diosgenin was identified as a specific regulator of cholesterol metabolism, which pave way for the design of novel clinical therapeutic strategies.