Obeticholic acid (OCA) has been examined to treat non-alcoholic steatohepatitis (NASH), but has unsatisfactory antifibrotic effect and deficient responsive rate in recent phase III clinical trial. Using a prolonged western diet-feeding murine NASH model, we show that OCA-shaped gut microbiota induces lipid peroxidation and impairs its anti-fibrotic effect. Mechanically, Bacteroides enriched by OCA deconjugates tauro-conjugated bile acids to generate excessive chenodeoxycholic acid (CDCA), resulting in liver ROS accumulation. We further elucidate that OCA reduces triglycerides containing polyunsaturated fatty acid (PUFA-TGs) levels, whereas elevates free PUFAs and phosphatidylethanolamines containing PUFA (PUFA-PEs), which are susceptible to be oxidized to lipid peroxides (notably arachidonic acid (ARA)-derived 12-HHTrE), inducing hepatocyte ferroptosis and activating hepatic stellate cells (HSCs). Inhibiting lipid peroxidation with pentoxifylline (PTX) rescues anti-fibrotic effect of OCA, suggesting combination of OCA and lipid peroxidation inhibitor could be a potential antifibrotic pharmacological approach in clinical NASH-fibrosis.