Abstract Aims We tested the hypothesis that the known reduction in myocardial functional reserve in preterm-born young adults is an independent predictor of exercise capacity (peak VO2) and heart rate recovery (HRR). Methods and results We recruited 101 normotensive young adults (n = 47 born preterm; 32.8 ± 3.2 weeks’ gestation and n = 54 term-born controls). Peak VO2 was determined by cardiopulmonary exercise testing (CPET), and lung function assessed using spirometry. Percentage predicted values were then calculated. HRR was defined as the decrease from peak HR to 1 min (HRR1) and 2 min of recovery (HRR2). Four-chamber echocardiography views were acquired at rest and exercise at 40% and 60% of CPET peak power. Change in left ventricular ejection fraction from rest to each work intensity was calculated (EFΔ40% and EFΔ60%) to estimate myocardial functional reserve. Peak VO2 and per cent of predicted peak VO2 were lower in preterm-born young adults compared with controls (33.6 ± 8.6 vs. 40.1 ± 9.0 mL/kg/min, P = 0.003 and 94% ± 20% vs. 108% ± 25%, P = 0.001). HRR1 was similar between groups. HRR2 decreased less in preterm-born young adults compared with controls (−36 ± 13 vs. −43 ± 11 b.p.m., P = 0.039). In young adults born preterm, but not in controls, EFΔ40% and EFΔ60% correlated with per cent of predicted peak VO2 (r2 = 0.430, P = 0.015 and r2 = 0.345, P = 0.021). Similarly, EFΔ60% correlated with HRR1 and HRR2 only in those born preterm (r2 = 0.611, P = 0.002 and r2 = 0.663, P = 0.001). Conclusions Impaired myocardial functional reserve underlies reductions in peak VO2 and HRR in young adults born moderately preterm. Peak VO2 and HRR may aid risk stratification and treatment monitoring in this population.