Transarterial chemoembolization (TACE) is often used as a locoregional therapy for early hepatocellular carcinoma (HCC) when local ablation or resection are not feasible, but incomplete response and recurrence are commonly observed. In this study, we sought to determine the association between metformin administration and TACE outcomes for single nodular HCC in patients with type 2 diabetes mellitus (T2DM). The retrospective cohort analysis included 164 T2DM patients with single nodular HCC who underwent TACE as an initial treatment, and 91 were exposed to metformin before and after TACE. Propensity score (PS) matching was used to balance covariates. Logistic regression analysis was used to determine the predictors of tumor response after TACE, and Cox regression analysis assessed independent predictors of local tumor recurrence (LTR) in patients with complete response after TACE. Metformin use was associated with significantly higher objective response rate (ORR) in the overall and PS-matched cohort (79.1% vs. 60.3 and 78.7% vs. 57.5%; p = 0.008 and p = 0.029, respectively). Logistic regression analysis showed that metformin use was an independent predictor of ORR in all and PS-matched patients (odds ratio = 2.65 and 3.06; p = 0.016 and 0.034, respectively). Cox regression analysis showed metformin administration was an independent predictor for lower LTR in all and PS-matched patients (hazard ratio = 0.28 and 0.27; p = 0.001 and 0.007, respectively). Metformin administration is associated with better initial response and lower local recurrence after TACE for single nodular HCC in T2DM.