Background & Aims: Few controlled studies have addressed the issue of effective medical treatment for nonalcoholic fatty liver disease (NAFLD). We herein assessed the effect of orlistat in patients with NAFLD. Methods: We performed a randomized, double-blind, placebo-controlled study on 52 patients with NAFLD diagnosed by ultrasound (US) and confirmed by liver biopsy (40 patients). The patients were randomized to receive either orlistat (120 mg 3 times daily for 6 months) or placebo. All patients participated in an identical behavioral weight loss program. All patients underwent monthly evaluation by abdominal US; liver enzyme levels, lipid profiles, insulin levels, and anthropometric parameters were monitored, and all patients underwent nutritional follow-up evaluation. Twenty-two patients underwent a second liver biopsy examination at the end of the study. Results: Fifty-two patients were recruited and 44 (mean age, 47.7 y; mean body mass index, 33) completed the study. Serum glucose and insulin levels (P < .03) were significantly higher in the orlistat group, which also presented a higher degree of fibrosis. Body mass index was reduced significantly in each group, with a nonsignificant difference between the groups. Serum alanine transaminase (ALT) levels decreased significantly in both groups, with an almost 2-fold reduction in the orlistat group (48% vs 26.4%). There was a statistically significant reversal of fatty liver by US only in the orlistat group (P < .05). Conclusions: Orlistat improves serum ALT levels and steatosis on US in NAFLD patients, beyond its effect on weight reduction.