Sarcopenia may increase non-alcoholic fatty liver disease (NAFLD) risk, but prevalence likely varies with different diagnostic criteria. This study examined the prevalence of sarcopenia and its defining components in adults with and without NAFLD and whether it varied by the method of muscle mass assessment [bioelectrical impedance (BIA) versus dual-energy X-ray absorptiometry (DXA)] and adjustment (height versus BMI). Adults (n = 7266) in the UK Biobank study (45-79 years) with and without NAFLD diagnosed by MRI, were included. Sarcopenia was defined by the 2018 European Working Group on Sarcopenia in Older People definition, with low appendicular skeletal muscle mass (ASM) assessed by BIA and DXA and adjusted for height or BMI. Overall, 21% of participants had NAFLD and the sex-specific prevalence of low muscle strength (3.6-7.2%) and sarcopenia (0.1-1.4%) did not differ by NAFLD status. However, NAFLD was associated with 74% (males) and 370% (females) higher prevalence of low ASM when adjusted for BMI but an 82% (males) to 89% (females) lower prevalence when adjusted for height (all P < 0.05). The prevalence of impaired physical function was 40% (males, P = 0.08) to 123% (females, P < 0.001) higher in NAFLD. In middle-aged and older adults, NAFLD was not associated with a higher prevalence of low muscle strength or sarcopenia but was associated with an increased risk of impaired physical function and low muscle mass when adjusted for BMI. These findings support the use of adiposity-based adjustments when assessing low muscle mass and the assessment of physical function in NAFLD.