Background and Purpose. The primary purpose of this study was to report differences in calf intermuscular adipose tissue (IMAT), muscle strength (peak torque), power, and physical function in individuals with obesity, diabetes mellitus (DM), and peripheral neuropathy (PN) compared with those without these impairments. A secondary purpose was to assess the relationship between IMAT and muscle strength, power, and physical function. Subjects and Methods. Six participants with obesity, DM, and PN (2 women, 4 men; mean age=58 years, SD=10; mean body mass index=36.3, SD=5; mean modified Physical Performance Test [PPT] score=22, SD=3) and 6 age- and sex-matched control subjects without these impairments were assessed and compared in muscle strength, muscle power, physical functioning, and muscle and fat volume, including IMAT in the calf muscles. Muscle, adipose tissue, and IMAT volumes of each calf were quantified by noninvasive magnetic resonance imaging. Muscle strength and power of the plantar-flexor and dorsiflexor muscles were quantified using isokinetic dynamometry. The modified PPT was used to assess physical function. Results. Leg muscle and fat volumes were similar between groups, although IMAT volumes were 2.2-fold higher in the subjects with obesity, DM, and PN (X-=120 cm3, SD=47) than in the control subjects (X-=54 cm 3, SD=41). Muscle strength, muscle power, ratio of leg muscle power to leg muscle volume, and modified PPT scores were lower in subjects with obesity, DM, and PN compared with the control subjects. Discussion and Conclusion. The data indicate that excess fat infiltration in leg skeletal muscles is associated with low calf muscle strength, low calf muscle power, and impaired physical function in individuals who are obese with DM and PN.