Mitochondrial dysfunction is a key contributor to the development and progression of metabolic dysfunction-associated steatotic liver disease (MASLD). Xanthones, bioactive flavonoids derived from various herbal medicines, are renowned for their anti-inflammatory, antioxidant, and anti-tumor properties. This study aimed to investigate the effects of xanthones isolated from Gentianella acuta on hepatic steatosis and the underlying mechanisms regulating mitochondrial function. We report that a xanthone fraction (400 mg/kg/day) effectively prevented obesity and hepatic steatosis in obese diabetic db/db mice in vivo. In vitro, xanthones inhibited lipid accumulation and mitochondrial dysfunction induced by high glucose (20 mM) and high palmitic acid (200 µM) in HepG2 cells. Mechanistically, norathyriol (NTR), a major in vivo metabolite of Gentianella acuta, inhibited the activity of dynamin-related protein 1 (Drp1), a protein associated with mitochondrial fission, and prevented its translocation from the cytoplasm to the mitochondria by inhibiting the orphan nuclear receptor (Nur77). Additionally, NTR increased the expression of the mitochondrial outer membrane protein FUN14 domain containing 1 (FUNDC1), which stimulated mitophagy to clear damaged or dysfunctional mitochondria under overnutrition conditions. We also discovered that reactive oxygen species (ROS) targeted FUNDC1, leading to mitochondrial damage, but this effect could be reversed by 7'-hydroxyl substituted xanthones. Collectively, 7'-hydroxyl substituted xanthones inhibited mitochondrial fission while promoting mitophagy, ultimately improving mitochondrial and liver function in diabetic hepatic steatosis. The modulation of mitochondrial function by 7'-hydroxyl substituted xanthones presents a novel approach for treating hepatic steatosis, particularly in diabetic conditions.