The pilot study proposed in this protocol will determine whether patients with a BMI of 35-50 kg/m2 will consent to liver biopsy, accept randomization to VSG, participate in lifestyle modification for a one-year period and consent to a paired liver biopsy at 12 months. Candidates will be biopsied with 48 randomizations within the first year yielding 20 (including dropouts) participants/group. This should be sufficient to further estimate meaningful differences in liver histology given the estimated weight loss of lifestyle modification with and without VSG and a correlation of percent weight loss and histological score improvement over the short term (12 months). Determining the impact of the VSG is essential for expanding the traditional indications for bariatric surgery and thus, broadening the potential impact of this pilot study.

The investigators will screen patients by telephone between the ages of 40 and 67 with a self-reported BMI of 35-50 kg/m2, a history of prediabetes, or type 2 diabetes. Prospective participants will be asked to provide a copy of their most recent liver chemistries to see if the AST or ALT fall in the inclusion range. The investigators will screen for a history of alcohol or other substance abuse and a surgical history that would preclude a safe VSG. Prospective participants will be invited to attend a seminar. They will be instructed to keep a food and exercise log for two weeks and return for a second visit. After consent is signed, during the eligibility review period participants will have their height and weight recorded, history reviewed, liver function tests, HbA1c, a urine sample, a basic metabolic profile, and INR will be obtained at this time and the participant will be referred for a liver biopsy. If the biopsy is consistent with NASH with a NAS \>=4, then the participant will undergo MRI assessment and serum markers for inflammation. Vital signs (pulse, temperature, respiration, blood pressure, weight and BMI) will be obtained at each study visit. Participants will then begin an 800 calorie per day diet for 7 days during which they will receive their randomization assignment to VSG or not; all participants will receive lifestyle modification as the investigators need to see if surgery can provide any additional benefit to lifestyle modification. A basic metabolic panel will be performed at the conclusion of the 800 calorie diet. VSG will be performed laparoscopically and the greater curvature resected 6 cm for the pylorus to the angle of His over a 40 French Bougie. Lifestyle modification can begin immediately after surgery, though the VSG participants will not have calorie limits until 6 months after surgery. Participants will be seen regularly by the hepatologist and surgeon at 1 week, 4 weeks, 12 weeks, 6 months, and 12 months. Lifestyle will be delivered on an individual basis once per week for the first 6 months, twice per month for the next 3 months, and monthly up to one year. Vitamins A, B1, B12 and D and a comprehensive metabolic panel including liver chemistries will be performed at 3 months and 12 months in both groups. At 12 months a repeat liver biopsy will be performed (participants will have the opportunity to select an alternative approach if they did not have a good experience with the initial liver biopsy in order to ensure a paired specimen). This decision will be made in conjunction with the interventional radiologist. MRI for steatosis and elasticity will be performed and serum inflammatory and fibrosis markers will be obtained at 12 months as well as the collection of another urine sample. Participants will exit the study but will continue usual care after 12 months. We will create a biorepository for stool samples to measure the microbiome and for remaining liver tissue to measure the transcriptome.

Participants meeting study entry criteria are randomized with equal probability to one of two study groups: (1) Lifestyle modification (LSM) or (2) Vertical Sleeve Gastrectomy (VSG + LSM) with Iifestyle modification, followed for 12 months. The primary goal for the trial is to determine if we can recruit, randomize, and retain participants to perform invasive and non-invasive measurements of NASH and fibrosis, deliver lifestyle modification and demonstrate the safety of VSG. The investigators wish to also understand which of these two interventions is more effective in achieving, 12 months after entry into the trial, a reduction in NAS composed of the non-weighted scores: (1) steatosis 0-3 (2) Inflammation 0-3 and (3) ballooning 0-2. Secondary goals include comparing the two treatment groups for changes in other measured outcomes including MRI assessments of intrahepatic triglyceride and liver elasticity and serum markers. As a pilot study, a sample size of 20 in each group should offer significant information as to the difference in NAS score reduction between to two groups and achieve adequate power to distinguish clinically significant changes in the primary and secondary outcome measures. These data support the overarching objective i.e. to provide evidence that a larger, longer-term clinical outcomes trial is feasible. A goal is for a longer term follow up for 5 years to assess the durability of treatment effects and treatment differences.