Let K be a field of characteristic p > 0, and let G be a finite p-group. Let U be the group of normalized units of the modular group algebra KG. In this paper we study the relation between exp (U) and exp (G). The main result shows that, if p ⩾ 7 and exp(G)3 > |G|, then G and U have the same exponent. We also show that, in general, exp(U) cannot be bounded above by any fixed function of exp(G). The method involves a reduction to problems in Lie nilpotency indices, which are solved via an extensive study of Lie dimension subgroups. Some results for smaller p are also given.