Both obesity and aging increase intrahepatic fat (IHF) content, which leads to nonalcoholic fatty liver disease (NAFLD) and metabolic abnormalities such as insulin resistance. We evaluated the effects of diet and diet in conjunction with exercise on IHF content and associated metabolic abnormalities in obese older adults. Eighteen obese (BMI ≥ 30 kg/m 2) older (≥65 years old) adults completed a 6-month clinical trial. Participants were randomized to diet (D group; n = 9) or diet exercise (DE group; n = 9). Primary outcome was IHF quantified by magnetic resonance spectroscopy (MRS). Secondary outcomes included insulin sensitivity (assessed by oral glucose tolerance), body composition (assessed by dual-energy X-ray absorptiometry), physical function (VO 2peak and strength), glucose, lipids, and blood pressure (BP). Body weight (D: 9 ± 1%, DE: 10 ± 2%, both P < 0.05) and fat mass (D: 13 ± 3%, DE 16 ± 3%, both P < 0.05) decreased in both groups but there was no difference between groups. IHF decreased to a similar extent in both groups (D: 46 ± 11%, DE: 45 ± 8%, both P < 0.05), which was accompanied by comparable improvements in insulin sensitivity (D: 66 ± 25%, DE: 68 ± 28%, both P < 0.05). The relative decreases in IHF correlated directly with relative increases in insulin sensitivity index (ISI) (r = 0.52; P < 0.05). Improvements in VO2peak, strength, plasma triglyceride (TG), and low-density lipoprotein-cholesterol concentration, and diastolic BP occurred in the DE group (all P < 0.05) but not in the D group. Diet with or without exercise results in significant decreases in IHF content accompanied by considerable improvements in insulin sensitivity in obese older adults. The addition of exercise to diet therapy improves physical function and other obesity-and aging-related metabolic abnormalities.