This study was aimed at finding out whether weight reduction alone can improve liver function in obese patients with fatty liver. We did a longitudinal, clinical intervention study on weight reduction by behavior modification, diet and exercise. The study subjects were 25 patients referred to an obesity clinic in whom obesity is the sole factor causing abnormal liver function and fatty liver. Patients were weighed about one year later. We compared the degree of improvement in hepatic function between Group I that showed weight reduction and Group II that showed no-weight reduction. Group I (13) showed dramatic improvement in aspartate aminotransferase (AST) and alanine aminotransferase (ALT) levels, nearly all down to within normal levels. AST showed statistically significant improvement from 74 ± 36 IU/l to 25 ± 7 IU/l. ALT also showed statistically significant improvement from 109 ± 67 IU/l to 30 ± 14 IU/l. Group II (12) showed higher AST and ALT levels on follow-up visit than initial visit. AST showed statistically significant elevation from 43 ± 11 IU/l to 59 ± 23 IU/l. ALT also showed statistically significant elevation from 64 ± 21 IU/l to 97 ± 33 IU/l. If we can rule the other causes of hepatic abnormalities in obese patients with fatty liver, we suggest these patients would benefit by weight reduction.