Obese women (140-180% of ideal body weight) were studied on a metabolic ward during 1 wk of maintenance feeding, followed by 5 wk of 800 kcal/d (liquid formula diet). Five subjects participated in a supervised program of daily aerobic exercise and three subjects remained sedentary. Total weight loss was not different between exercising and nonexercising subjects but significantly more of the weight loss came from fat and less from fat-free mass in the exercising subjects. Resting metabolic rate (RMR) declined similarly in both groups (~20%), even though exercising subjects were in greater negative energy balance due to the added energy cost of exercise. In summary, results from this controlled inpatient study indicate that exercise is beneficial when coupled with food restriction because it favors loss of body fat and preserves fat-free mass.