Although 5%-10% weight loss is routinely recommended for people with obesity, the precise effects of 5% and further weight loss on metabolic health are unclear. We conducted a randomized controlled trial that evaluated the effects of 5.1% ± 0.9% (n = 19), 10.8% ± 1.3% (n = 9), and 16.4% ± 2.1% (n = 9) weight loss and weight maintenance (n = 14) on metabolic outcomes. 5% weight loss improved adipose tissue, liver and muscle insulin sensitivity, and β cell function, without a concomitant change in systemic or subcutaneous adipose tissue markers of inflammation. Additional weight loss further improved β cell function and insulin sensitivity in muscle and caused stepwise changes in adipose tissue mass, intrahepatic triglyceride content, and adipose tissue expression of genes involved in cholesterol flux, lipid synthesis, extracellular matrix remodeling, and oxidative stress. These results demonstrate that moderate 5% weight loss improves metabolic function in multiple organs simultaneously, and progressive weight loss causes dose-dependent alterations in key adipose tissue biological pathways.