The purpose of the study is to evaluate the efficacy and safety of ketogenic diet (KD) treatment of (i) obesity, (ii) type 2 diabetes mellitus and (iii) obstructive sleep apnea (OSA) in patients with obesity and Type 2 DM and in patients with obesity and/or OSA. This will be a randomized, open-label three arm controlled study comparing weight loss in obese participants with type 2 diabetes and/or obstructive sleep apnea treated for 9 months with 3:1 [fat]:[protein+carbohydrate] ratio, 1600 kcal/day diet (Group A) with weight loss in participants treated with orlistat 120 mg TID and lifestyle intervention consisting of dietary advice, recommended caloric goal of 1600 kcal/day (Group B), and in participants treated with only lifestyle intervention consisting of dietary advice, recommended caloric goal of 1600 kcal/day (Group C).

The study sample will be randomized into three treatment arms, KD (Group A, n=50), Orlistat 120 mg TID (Group B, n=50) and dietary and lifestyle counseling (Group C, n=50) in a 1:1:1 ratio. Each arm will include 100% participants with obesity and co-morbid type 2 DM and 50% participants with co-morbid OSA. Randomization will be stratified for diabetic status.

Inclusion Criteria:

• age 18-70
• ability and willingness to signed informed consent form
• BMI more than 30kg/m2, with type 2 DM and/or OSA
• For diabetic participants, stable hypoglycemic medications for at least 2 months
• For participants with OSA, previously documented polysomnogram with apnea/hypopnea index (AHI)>15/h.

Exclusion Criteria:

• BMI change of +/- 3.0 kg/m2 of baseline BMI within past 12 months.
• History of bariatric surgery ≤ 3 years prior to enrollment.
• Any systemic illness or unstable medical condition that might pose additional risk, including: cardiac, unstable metabolic or endocrine disturbances, renal or liver disease, past history of renal calculi, hyperuricemia, hypercalcemia, mitochondrial disease, known disorder of fatty acid metabolism, porphyria, and active systemic cancer.
• History of uncontrolled hyperlipidemia
• For participants with DM, change in the dose or type of hypoglycemic treatment within 2 months prior to enrollment.
• Psychosis within six months of enrollment, evidenced by treatment with anti-psychotic medications with recent medication initiation or dose increase.
• Active drug or alcohol dependence or any other factors that, in the opinion of the site investigators would interfere with adherence to study requirements;
• History of hyperthyroidism
• History of glaucoma
• History of cerebrovascular disease or unstable heart disease within 6 months of enrollment
• Pregnancy
• Use of any investigational drugs within 3 months of enrollment.
• Inability or unwillingness of subject to give written informed consent.