Caloric restriction (CR) results in fat loss; however, it may also result in loss of muscle and thereby reduce strength and aerobic capacity (VO2 max). These effects may not occur with exercise-induced weight loss (EX) because of the anabolic effects of exercise on heart and skeletal muscle. We tested the hypothesis that CR reduces muscle size and strength and VO2 max, whereas EX preserves or improves these parameters. Healthy 50- to 60-yr-old men and women (body mass index of 23.5-29.9 kg/m2) were studied before and after 12 mo of weight loss by CR (n = 18) or EX (n = 16). Lean mass was assessed by dual-energy X-ray absorptiometry, thigh muscle volume by MRI, isometric and isokinetic knee flexor strength by dynamometry, and treadmill VO2 max by indirect calorimetry. Both interventions caused significant decreases in body weight (CR: -10.7 +/- 1.4%, EX: -9.5 +/- 1.5%) and lean mass (CR: -3.5 +/- 0.7%, EX: -2.2 +/- 0.8%), with no significant differences between groups. Significant decreases in thigh muscle volume (-6.9 +/- 0.8%) and composite knee flexion strength (-7.2 +/- 3%) occurred in the CR group only. Absolute VO2 max decreased significantly in the CR group (-6.8 +/- 2.3%), whereas the EX group had significant increases in both absolute (+15.5 +/- 2.4%) and relative (+28.3 +/- 3.0%) VO2 max. These data provide evidence that muscle mass and absolute physical work capacity decrease in response to 12 mo of CR but not in response to a similar weight loss induced by exercise. These findings suggest that, during EX, the body adapts to maintain or even enhance physical performance capacity.