Background/Objective Obesity exacerbates age-related physical disability; however, observational studies show that any weight loss in old age is associated with greater risk of mortality. Conversely, randomized controlled trials in older adults show that weight loss is beneficial. The discrepancy may be due to weight loss intention and differential changes to regional body composition. The purpose of this research was to evaluate the independent role of regional body composition remodeling in improving physical function. Design Pilot Randomized Controlled Trial. Setting Community based research center. Participants Thirty-six community dwelling, overweight to moderately obese (BMI 28.0-39.9 kg/m2) older adults (age 70.6±6.1 yrs). Intervention Physical activity plus weight loss (PA+WL, n=21) or PA plus successful aging (SA) education. PA consisted primary of treadmill walking supplemented with lower extremity resistance and balance training. The WL program was based on the Diabetes Prevention Project and aimed at achieving a 7% weight loss by cutting calories, specifically those from fat. Measurements At baseline, 6- and 12-months, body composition was measured using computerized tomography and dual x-ray absorptiometry. Abdominal visceral (VAT) and thigh intermuscular (IMAT) adipose tissue were quantified. Physical function was assessed using the short physical performance battery (SPPB). Results Separate multivariable linear regression models with both groups combined demonstrated that decreases in IMAT and VAT were significantly associated with improvements in SPPB (PSPPB scores from baseline (0.8±1.4, P Conclusion Decreases in IMAT and VAT are important mechanisms underlying improved function following intentional weight loss plus physical activity.