Laparoscopic adjustable gastric banding (LAGB) has rapidly emerged as a popular bariatric procedure because of its safety, efficacy, durability and adjustability. Despite widespread use, there is limited understanding of how it induces weight loss. Previously, it has been classified as a restrictive procedure, physically limiting the patient to a small meal that subsequently slowly empties into the distal stomach. However, the tiny pouch of stomach created above the LAGB appears to be unable to accommodate even the smallest of meals. Therefore, the key mechanism has been hypothesized to be the induction of satiety via, as yet, undefined pathways. The critical question remains: what are the key physiological changes that lead to satiety and weight loss? In successful LAGB patients, a consistent intraluminal pressure at the level of the LAGB of 26.9 ± 19.8 mm Hg is observed. Studies using semi-solid swallows combined with intraluminal pressure recordings have demonstrated that semi-solid transit across the resistance of the LAGB is mediated by repeated esophageal peristaltic contractions (mean 4.5 ± 2.9) that produce episodic flow, interspersed by reflux events. Failed transit results in obstruction and regurgitation, whereas dilatation of the supraband stomach induces severe and intolerable reflux. Overall gastric emptying does not appear to be significantly altered following LAGB. Focused investigations have shown that the supraband stomach is empty of an ingested meal 1-2 min after intake ceases. Considerable progress has been made in understanding the mechanical physiological effects of the LAGB on esophageal and proximal gastric function. These have been correlated with patient outcomes and sensations. On the basis of recent data, it appears that the LAGB activates the peripheral satiety mechanism without physically restricting the meal size. Therefore, it should not be classified as a restrictive procedure. The precise mechanism of weight loss with the LAGB remains to be delineated.