NAFLD is characterized by accumulation of fat in the liver that can lead to health complications. Previous studies have found the obesity phenotype and its components to be risk factors for the development of NAFLD. This study aims to examine the relationship between the obesity phenotype and NAFLD among each racial-ethnic group. We analyzed data from the NHANES III survey (1988-1994). The obesity phenotype was defined based on BMI and metabolic syndrome. NAFLD was defined by abdominal ultrasounds among non-alcoholics with no infection or taking drugs affecting the liver. A higher prevalence of NAFLD was found among the metabolically unhealthy obese group (43.1%) and the metabolically unhealthy overweight (29.4%) than the metabolically unhealthy normal weight (11.8%). Mexicans-Americans had higher odds of NAFLD relative to whites (adjusted odds ratio (AOR) = 1.3, 95% confidence interval (CI) = 1.01-1.9, p = 0.04). The metabolically healthy obese phenotype was associated with NAFLD (p > 0.05) in the overall sample and in Whites. The metabolically healthy overweight was associated with NAFLD only among Mexican-American (p < 0.05). Metabolically unhealthy overweight or obese had higher odds of NAFLD relative to the metabolically healthy normal weight and this relation is consistent in all the racial/ethnic groups (p < 0.05). Metabolically healthy overweight and obese individuals had a high chance of NAFLD and it varied by race/ethnicity. Healthcare providers should pay more attention to care for those who are part of the metabolically healthy overweight or obese group especially among the Mexican-American population.