Oxytocin (OXT), an anorexigenic hormone, is also bone anabolic. Further, OXT administration results in increases in lean mass (LM) in adults with sarcopenic obesity. We examine, for the first time, associations of OXT with body composition and bone endpoints in 25 youth 13–25 years old with severe obesity who underwent sleeve gastrectomy (SG) and 27 non-surgical controls (NS). Forty participants were female. Subjects underwent fasting blood tests for serum OXT and DXA for areal bone mineral density (aBMD) and body composition. At baseline, SG vs. NS had higher median body mass index (BMI) but did not differ for age or OXT levels. Over 12 months, SG vs. NS had greater reductions in BMI, LM, and fat mass (FM). OXT decreased in SG vs. NS 12 months post-SG. While baseline OXT predicted a 12-month BMI change in SG, decreases in OXT levels 12 months post-SG were not associated with decreases in weight or BMI. In SG, decreases in OXT were positively associated with decreases in LM but not with decreases in FM or aBMD. Loss of LM, a strong predictor of BMD, after bariatric surgery may reduce functional and muscular capacity. OXT pathways may be targeted to prevent LM loss following SG.