Infiltration of skeletal muscle with adipose tissue (i.e. intermuscular adipose tissue; IMAT) is associated with insulin resistance. As we reported previously, calorie restriction (CR) and exercise-induced weight loss (EX) improve glucose tolerance and insulin action similarly; however, it is not known if they result in comparable reductions in IMAT. Recent evidence suggests that physical activity protects against IMAT accumulation. PURPOSE: To evaluate the hypothesis that exercise-induced weight loss results in a larger IMAT reduction as compared to similar weight loss achieved through CR. We also evaluated the hypothesis that reductions in IMAT correlate with improvements in glucose tolerance and insulin action. METHODS: Sedentary men and women (50-60 y, body mass index 23.5-29.9 kg/m2) were randomly assigned to 1 year of CR (n=17), EX (n=16), or a control group (CON, n=6). Bilateral thigh IMAT volume was quantified in a 10 cm region of interest using magnetic resonance imaging. Insulin sensitivity index (ISI) and areas under the curve (AUC) for glucose and insulin were assessed with an oral-glucose-tolerance test. RESULTS: Weight loss was comparable (p=0.25) in the CR (-10.8±1.4%) and EX groups (-8.3±1.5%) and greater than that in the control group (-2.0±2.4%, p<0.05). IMAT reductions were larger in the CR and EX groups than in the CON group (p=0.05). After statistically controlling for differences in total body fat mass change between the CR and EX groups, IMAT reductions were nearly 2-fold greater (p=0.02) in the EX group (-45±5 mL) than in the CR group (-25±5 mL). In the EX group but not in the CR group, reductions in IMAT were correlated with increases in ISI (r=-0.71, p=0.003) and with decreases in glucose AUC (r=0.56, p=0.02) and insulin AUC (r=0.66, p=0.008). CONCLUSION: Calorie restriction and exercise-induced weight loss both decrease IMAT volume. Reductions in response to exercise-induced weight loss, however, are larger and are correlated with improvements in glucoregulation. These results suggest that IMAT changes may be mechanistically more important for improvements in glucoregulation in response to exercise-induced weight loss, as compared to calorie restriction. Supported by NIH grants AG20487, RR00036, DK20579, DK56341, AG00078, and DK080886.