Bariatric surgery elevates serum bile acids. Conjugated bile acid administration, such as tauroursodeoxycholic acid (TUDCA), improves insulin sensitivity, whereas short-circuiting bile acid circulation through ileal interposition surgery in rats raises TUDCA levels. We hypothesized that bariatric surgery outcomes could be recapitulated by short circuiting the normal enterohepatic bile circulation. We established a model wherein male obese rats underwent either bile diversion (BD) or Sham (SH) surgery. The BD group had a catheter inserted into the common bile duct and its distal end anchored into the middistal jejunum for 4-5 weeks. Glucose tolerance, insulin and glucagon-like peptide-1 (GLP-1) response, hepatic steatosis, and endoplasmic reticulum (ER) stress were measured. Rats post-BD lost significantly more weight than the SH rats. BD rats gained less fat mass after surgery. BD rats had improved glucose tolerance, increased higher postprandial glucagon-like peptide-1 response and serum bile acids but less liver steatosis. Serum bile acid levels including TUDCA concentrations were higher in BD compared to SH pair-fed rats. Fecal bile acid levels were not different. Liver ER stress (C/EBP homologous protein mRNA and pJNK protein) was decreased in BD rats. Bile acid gavage (TUDCA/ursodeoxycholic acid [UDCA]) in diet-induced obese rats, elevated serum TUDCA and concomitantly reduced hepatic steatosis and ER stress (C/EBP homologous protein mRNA). These data demonstrate the ability of alterations in bile acids to recapitulate important metabolic improvements seen after bariatric surgery. Further, our work establishes a model for focused study of bile acids in the context of bariatric surgery that may lead to the identification of therapeutics for metabolic disease.