Background: Intrahepatic triacylglycerol (liver TG) content is associated with hepatic insulin resistance and dyslipidemia. Liver TG content can be modulated within days under hypocaloric conditions. Objectives: We hypothesized that 4 d of eucaloric low-carbohydrate/high-fat (LC) intake would decrease liver TG content, whereas a high-carbohydrate/low-fat (HC) intake would increase liver TG content, and further that alterations in liver TG would be linked to dynamic changes in hepatic glucose and lipid metabolism. Methods: A randomized crossover trial in males with 4 d + 4 d of LC and HC, respectively, with ≥2 wk of washout. ¹H-magnetic resonance spectroscopy (¹H-MRS) was used to measure liver TG content, with metabolic testing before and after intake of an LC diet (11E% carbohydrate corresponding to 102 ± 12 {mean ± standard deviation [SD]) g/d, 70E% fat} and an HC diet (65E% carbohydrate corresponding to 537 ± 56 g/d, 16E% fat). Stable [6,6-²H₂]-glucose and [1,1,2,3,3-D5]-glycerol tracer infusions combined with hyperinsulinemic-euglycemic clamps and indirect calorimetry were used to measure rates of hepatic glucose production and lipolysis, whole-body insulin sensitivity and substrate oxidation. Results: Eleven normoglycemic males with overweight or obesity (BMI 31.6 ± 3.7 kg/m²) completed both diets. The LC diet reduced liver TG content by 35.3% (95% confidence interval: −46.6, −24.1) from 4.9% [2.4–11.0] (median interquartile range) to 2.9% [1.4–6.9], whereas there was no change after the HC diet. After the LC diet, fasting whole-body fat oxidation and plasma beta-hydroxybutyrate concentration increased, whereas markers of de novo lipogenesis (DNL) diminished. Fasting plasma TG and insulin concentrations were lowered and the hepatic insulin sensitivity index increased after LC. Peripheral glucose disposal was unchanged. Conclusions: Reduced carbohydrate and increased fat intake for 4 d induced a marked reduction in liver TG content and increased hepatic insulin sensitivity. Increased rates of fat oxidation and ketogenesis combined with lower rates of DNL are suggested to be responsible for lowering liver TG. This trial was registered at clinicaltrials.gov as NCT04581421.