It has been proposed that an extended version of the Hubbard model which potentially hosts rich correlated physics may be well simulated by the transition metal dichalcogenide (TMD) moiré heterostructures. Motivated by recent reports of continuous metal-insulator transition (MIT) at half filling, as well as correlated insulators at various fractional fillings in TMD moiré heterostructures, we propose a theory for the potentially continuous MIT with fractionalized electric charges. The charge fractionalization at the MIT will lead to various experimental observable effects, such as a large resistivity as well as large universal resistivity jump at the continuous MIT. These predictions are different from previously proposed theory for interaction-driven continuous MIT. Physics in phases near the MIT will also be discussed. © 2022 authors. Published by the American Physical Society.