Accumulating evidence supports a connection between sarcopenic obesity (SO) and NAFLD. The extent to which fatty liver contributes to impaired muscle contractility is not yet well established. The aim of our study was to investigate the effect of NAFLD on dynapenia in patients with SO. In this study, 71 non-diabetic subjects (age 55 (7.8) years, BMI 35.2 kg/m2 (32.6–38.8)) were classified as having SO and non-sarcopenic obesity (NSO). SO patients displayed worse serum lipid profiles, higher body fat, and lower skeletal muscle mass (both total and appendicular) than NSO patients, despite the absence of any significant differences in body weight, glycometabolic parameters, and hepatic steatosis prevalence. A positive correlation between disposition index and muscle quality index (MQI) (r = 0.393, p = 0.013) emerged after controlling for menopause and body fat percentage. Based on multiple linear regression analysis, MQI was significantly positively associated with the disposition index (β: 0.059, SE: 0.002, p = 0.006) after adjustment for menopause, body fat percentage, and the presence of hepatic steatosis according to the hepatorenal index (HRI). Similar findings emerged when including liver enzyme levels in place of hepatic steatosis. Muscle quality was positively associated with β-cell function corrected for insulin resistance among patients with obesity and sarcopenic obesity, irrespective of the presence of fatty liver disease.