Soy protein is effective at preventing hepatic steatosis; however, the mechanisms are poorly understood. We tested the hypothesis that soy vs. dairy protein-based diet would alter microbiota and attenuate hepatic steatosis in hyperphagic Otsuka Long-Evans Tokushima fatty (OLETF) rats. Male OLETF rats were randomized to “Western” diets containing milk protein isolate (MPI), soy protein isolate (SPI) or 50:50 MPI/SPI (MS) (n=9–10/group; 21% kcal protein) for 16 weeks. SPI attenuated (P<.05) fat mass and percent fat by ~10% compared with MS, but not compared with MPI. Serum thiobarbituric acid reactive substance and total and low-density lipoprotein cholesterol concentrations were lower (P<.05) with dietary SPI vs. MPI and MS. Histological hepatic steatosis was lower (P<.05) in SPI compared with MPI or MS. Lipidomic analyses revealed reductions (P<.05) in hepatic diacylglycerols but not triacylglycerols in SPI compared with MPI, which was associated with lower hepatic de novo lipogenesis (ACC, FAS and SCD-1 protein content, and hepatic 16:1 n-7 and 18:1 n-7 PUFA concentrations) (P<.05) compared with MPI and MS; however, MPI displayed elevated hepatic mitochondrial function compared with SPI and MS. Fecal bacterial 16S rRNA analysis revealed SPI-intake elicited increases (P<.05) in Lactobacillus and decreases (P<.05) in Blautia and Lachnospiraceae suggesting decreases in fecal secondary bile acids in SPI rats. SPI and MS exhibited greater (P<.05) hepatic Fxr, Fgfr4, Hnf4a, HmgCoA reductase and synthase mRNA expression compared with MPI. Overall, dietary SPI compared with MPI decreased hepatic steatosis and diacylglycerols, changed microbiota populations and altered bile acid signaling and cholesterol homeostasis in a rodent model of obesity.