Vertical sleeve gastrectomy (VSG) is one of the most effective and durable therapies for morbid obesity and its related complications. Although bile acids (BAs) have been implicated as downstream mediators of VSG, the specific mechanisms through which BA changes contribute to the metabolic effects of VSG remain poorly understood. Here, we confirm that high fat diet-fed global farnesoid X receptor (Fxr) knockout mice are resistant to the beneficial metabolic effects of VSG. However, the beneficial effects of VSG were retained in high fat diet-fed intestine- or liver-specific Fxr knockouts, and VSG did not result in Fxr activation in the liver or intestine of control mice. Instead, VSG decreased expression of positive hepatic Fxr target genes, including the bile salt export pump (Bsep) that delivers BAs to the biliary pathway. This reduced small intestine BA levels in mice, leading to lower intestinal fat absorption. These findings were verified in sterol 27-hydroxylase (Cyp27a1) knockout mice, which exhibited low intestinal BAs and fat absorption and did not show metabolic improvements following VSG. In addition, restoring small intestinal BA levels by dietary supplementation with taurocholic acid (TCA) partially blocked the beneficial effects of VSG. Altogether, these findings suggest that reductions in intestinal BAs and lipid absorption contribute to the metabolic benefits of VSG.