This study explored the ameliorative effect of Auricularia auricula peptides (AAPs) on palmitic acid (PA)-induced non-alcoholic fatty liver in HepG2 cells. The effect of AAP with molecular mass less than 3 kDa (AAP-3), with the highest ability to reduce intracellular triglyceride (TG) accumulation, on cell metabolism and gene expression was investigated. The result showed that intracellular TG level was increased by 1.70 times in 200 μmol/L PA-treated HepG2 cells after 24 h of culture compared to the negative control group, and returned to normal after subsequent treatment with 2.0 mg/mL AAP-3 for 24 h (P > 0.05). Moreover, AAP-3 decreased total cholesterol (TC), low density lipoprotein (LDL) and malondialdehyde (MDA) level, as well as aspartate aminotransferase (AST) and alanine aminotransferase (ALT) activity, and increased high-density lipoprotein (HDL) level and superoxide dismutase (SOD) activity, thus exhibiting lipid-lowering, cholesterol-lowering and antioxidant activities. By real-time quantitative polymerase chain reaction (PCR) analysis, it was found that AAP-3 decreased the expression levels of the fatty-acid synthase (FAS) and sterol regulatory element-binding protein-1c (SREBP-1c) genes, and increased the expression levels of AMPK (AMP-activated protein kinase), PPAR-α (peroxisome proliferator-activated receptor alpha), PGC-1α (peroxisome proliferator-activated receptor γ coactivator 1 alpha), and ATGL (adipose triglyceride lipase). The findings of this study may provide a theoretical basis for exploring the functional components of Auricularia auricula and plant-derived functional polypeptides.