We previously reported an "athlete’s paradox" in which endurance-trained athletes, who possess a high oxidative capacity and enhanced insulin sensitivity, also have higher intramyocellular lipid (IMCL) content. The purpose of this study was to determine whether moderate exercise training would increase IMCL, oxidative capacity of muscle and insulin sensitivity in previously sedentary overweight to obese, insulin resistant older subjects. Twenty-five older (66.4±0.8years) obese (BMI=30.3±0.7kg/m²) men (n=9) and women (n=16) completed a 16-week moderate but progressive exercise training program. Body weight and fat mass modestly but significantly (P<0.01) decreased. Insulin sensitivity, measured using the euglycemic-hyperinsulinemic clamp, was increased (21%, P=0.02) with modest improvements (7%, P=0.04) in aerobic fitness (VO₂peak). Histochemical analyses of IMCL (Oil Red O staining), oxidative capacity (succinate dehydrogenase activity; SDH), glycogen content, capillary density and fiber type were performed on skeletal muscle biopsies. Exercise training increased IMCL by 21%. In contrast, diacylglycerol and ceramide, measure by mass-spectroscopy, were decreased (n=13, -29% and -24%, respectively,both P<0.05) with exercise training. SDH (19%), glycogen content (15%), capillary density (7%) and the percentage of type I, slow-oxidative fibers (from 50.8% to 55.7%), all P0.05 were increased after exercise. In summary, these results extend the "athlete’s paradox" by demonstrating that chronic exercise in overweight to obese older adults improves insulin sensitivity in conjunction with favorable alterations in lipid partitioning and an enhanced oxidative capacity within muscle. Therefore, several key deleterious effects of aging and/or obesity on the metabolic profile of skeletal muscle can be reversed with only moderate increases in physical activity.