In adults with mild type 2 diabetes, a 12-week eucaloric ketogenic diet (9% energy from carbohydrates) is associated with a 28% reduction in liver fat compared to a low-fat diet (55% energy from carbohydrates), indicating that carbohydrate restriction is associated with improved hepatic lipid metabolism independently of weight loss.

When carbs are severely limited, the liver stops making new fat and starts burning fat for energy instead. Less sugar means less insulin and more glucagon, which turns off the enzyme that makes fat-building blocks and turns on the gate that lets fat into mitochondria to be burned. With less sugar available, the liver runs out of a key molecule needed to process fat for energy, so it redirects fat pieces to make ketones instead. This stops fat from piling up in the liver.