Nonalcoholic fatty liver disease (NAFLD) is the most common chronic liver disease in the Western world, and safe and effective therapies are needed. Bile acids (BAs) and their receptors [including the nuclear receptor for BAs, farnesoid X receptor (FXR)] play integral roles in regulating whole-body metabolism and hepatic lipid homeostasis. We hypothesized that interruption of the enterohepatic BA circulation using a luminally restricted apical sodium-dependent BA transporter (ASBT) inhibitor (ASBTi; SC-435) would modify signaling in the gut-liver axis and reduce steatohepatitis in high-fat diet (HFD)–fed mice. Administration of this ASBTi increased fecal BA excretion and messenger RNA (mRNA) expression of BA synthesis genes in liver and reduced mRNA expression of ileal BA-responsive genes, including the negative feedback regulator of BA synthesis, fibroblast growth factor 15. ASBT inhibition resulted in a marked shift in hepatic BA composition, with a reduction in hydrophilic, FXR antagonistic species and an increase in FXR agonistic BAs. ASBT inhibition restored glucose tolerance, reduced hepatic triglyceride and total cholesterol concentrations, and improved NAFLD activity score in HFD-fed mice. These changes were associated with reduced hepatic expression of lipid synthesis genes (including liver X receptor target genes) and normalized expression of the central lipogenic transcription factor, Srebp1c. Accumulation of hepatic lipids and SREBP1 protein were markedly reduced in HFD-fed Asbt^−/− mice, providing genetic evidence for a protective role mediated by interruption of the enterohepatic BA circulation. Together, these studies suggest that blocking ASBT function with a luminally restricted inhibitor can improve both hepatic and whole body aspects of NAFLD.