Lysosomal acid lipase (LAL) is the sole enzyme known to be responsible for the hydrolysis of cholesteryl esters and triglycerides at an acidic pH in lysosomes, resulting in the release of unesterified cholesterol and free fatty acids. However, the role of LAL in diet-induced adaptations is largely unexplored. In this study, we demonstrate that feeding a Western-type diet to Lal-deficient (LAL-KO) mice triggers metabolic reprogramming that modulates gut-liver cholesterol homeostasis. Induction of ileal fibroblast growth factor 15 (three-fold), absence of hepatic cholesterol 7α-hydroxylase expression, and activation of the ERK phosphorylation cascade results in altered bile acid composition, substantial changes in the gut microbiome, reduced nutrient absorption by 40%, and two-fold increased fecal lipid excretion in LAL-KO mice. These metabolic adaptations lead to impaired bile acid synthesis, lipoprotein uptake, and cholesterol absorption and ultimately to the resistance of LAL-KO mice to diet-induced obesity. Our results indicate that LAL-derived lipolytic products might be important metabolic effectors in the maintenance of whole-body lipid homeostasis.