The study, to appear in issue of the Journal of the American Medical Association (JAMA), also found that the procedure was linked to fewer diabetes-related complications in the severely overweight.
The findings come at a time when obesity and diabetes have reached epidemic proportions, creating a costly public health problem.
In the United States, more than 29 million people -- or 9.3 percent of the population -- had diabetes in 2012, up from an estimated 26 million two years earlier, the Centers for Disease Control and Prevention said .
Treating the disease and related complications amounted to $245 billion in medical expenses, as well as lost pay in 2012, up from $174 billion five years earlier.
Carried out by a team led by Lars Sjöström of the University of Gothenburg, the findings to appear in JAMA involved a follow-up of the Swedish Obese Subjects study.
The median follow-up time was 18.1 years for people who had had surgery and 17.6 years in the control group in an effort to determine the long-term effects of bariatric procedures, diabetes remission and diabetes-linked complications.
The authors found that the proportion of people with type 2 diabetes who had bariatric surgery and were in remission was 72.3 percent two years after the procedure, compared to 16.4 percent in the control group.
Fifteen years on, the diabetes remission rates were 30.4 percent for those who had surgery, significantly higher than the 6.5 percent remission in the control group.
All kinds of bariatric surgery -- including gastric bypass and adjustable and nonadjustable banding procedures -- "were associated with higher remission rates compared with usual care," said a release announcing the study.
What's more, according to the authors who say the findings require confirmation through randomized trials, this type of surgery is also linked to a lower incidence of micro- and macrovascular complications.
According to CDC data, one in four people with diabetes in the United States aren't aware they have the disease.
What's more, 86 million US adults aged 20 and older have what is known as prediabetes -- that's when blood sugar levels are above normal but not high enough to be deemed type 2 diabetes.
Without shedding pounds and engaging in moderate physical activity, 15 to 30 percent of this at risk group could develop the full-blown disease within five years, the CDC warned.
It said 208,000 people younger than 20 have been diagnosed with type 1 and type 2 diabetes.
"These new numbers are alarming and underscore the need for an increased focus on reducing the burden of diabetes in our country," said CDC official Ann Albright.
"Diabetes is costly in both human and economic terms. It's urgent that we take swift action to effectively treat and prevent this serious disease."