Non-alcoholic fatty-liver disease (NAFLD) is frequent in obese patients and represents a major risk factor for the development of diabetes and its complications. Bariatric surgery reverses the hepatic features of NAFLD. However, its mechanism of action remains elusive. We performed a comprehensive analysis of the mechanism leading to the improvement of NAFLD and insulin resistance in both obese rodents and humans following sleeve-gastrectomy (SG). SG improved insulin sensitivity and reduced hepatic and monocyte fat accumulation. Importantly, fat accumulation in monocytes was well comparable to that in hepatocytes, suggesting that Plin2 levels in monocytes might be a non-invasive marker for the diagnosis of NAFLD. Both in vitro and in vivo studies demonstrated an effective metabolic regeneration of liver function and insulin sensitivity. Specifically, SG improved NAFLD significantly by enhancing AMP-activated protein kinase (AMPK) phosphorylation and chaperone-mediated autophagy (CMA) that translate into the removal of Plin2 coating lipid droplets. This led to an increase in lipolysis and specific amelioration of hepatic insulin resistance. Elucidating the mechanism of impaired liver metabolism in obese subjects will help to design new strategies for the prevention and treatment of NAFLD.