Obesity and type-2 diabetes mellitus (T2DM) are metabolic disorders. Obesity increases the risk of T2DM, and as obesity is becoming increasingly common, more individuals suffer from T2DM, which poses a considerable burden on health systems. Traditionally, pharmaceutical therapy together with lifestyle changes is used to treat obesity and T2DM to decrease the incidence of comorbidities and all-cause mortality and to increase life expectancy. Bariatric surgery is increasingly replacing other forms of treatment of morbid obesity, especially in patients with refractory obesity, owing to its many benefits including good long-term outcomes and almost no weight regain. The bariatric surgery options have markedly changed recently, and laparoscopic sleeve gastrectomy (LSG) is gradually gaining popularity. LSG has become an effective and safe treatment for type-2 diabetes and morbid obesity, with a high cost-benefit ratio. Here, we review the me-chanism associated with LSG treatment of T2DM, and we discuss clinical studies and animal experiments with regard to gastrointestinal hormones, gut microbiota, bile acids, and adipokines to clarify current treatment modalities for patients with obesity and T2DM.