A carbohydrate-restricted diet is a widely recommended intervention for non-alcoholic fatty liver disease (NAFLD), but a systematic perspective on the multiple benefits of this diet is lacking. Here, we performed a short-term intervention with an isocaloric low-carbohydrate diet with increased protein content in obese subjects with NAFLD and characterized the resulting alterations in metabolism and the gut microbiota using a multi-omics approach. We observed rapid and dramatic reductions of liver fat and other cardiometabolic risk factors paralleled by (1) marked decreases in hepatic de novo lipogenesis; (2) large increases in serum β-hydroxybutyrate concentrations, reflecting increased mitochondrial β-oxidation; and (3) rapid increases in folate-producing Streptococcus and serum folate concentrations. Liver transcriptomic analysis on biopsy samples from a second cohort revealed downregulation of the fatty acid synthesis pathway and upregulation of folate-mediated one-carbon metabolism and fatty acid oxidation pathways. Our results highlight the potential of exploring diet-microbiota interactions for treating NAFLD.