The purpose of this study was to examine the relative contributions of changes in muscle quality and body composition to changes in lower-extremity physical function (LEPF) following a 6-month exercise and weight loss intervention in overweight and obese older women. Thirty-eight overweight and obese (BMI=30.0±4.4kg/m2) older (age=69.3±4.1y) women completed 6months of multicomponent exercise (cardiorespiratory, resistance, balance and flexibility training) and weight loss (hypocaloric diet that reduced energy intake by ˜500kcal/d). Body composition was measured via dual-energy X-ray absorptiometry and muscle quality (N-m/kg) was defined as maximal concentric isokinetic knee torque divided by upper-leg lean mass. The standardized scores of four objective measures of physical function were summed to yield a composite LEPF Z-score. At 6months, there were significant reductions in body weight (−9.6±3.5%, p<0.01), absolute fat mass (−6.8±2.4kg, p<0.01) and relative adiposity (−4.9±2.1%, p<0.01). There were also improvements in both muscle quality (+1.6±1.8N-m/kg, p<0.01) and individual measures of LEPF (11–57%, p<0.01). Multivariate linear regression indicated that increased muscle quality was the strongest independent predictor of an improvement in LEPF Z-score (standardized β=0.64, p<0.01) and explained 34% of the variance. A reduction in body weight also predicted an improvement in LEPF, independent of the change in muscle quality. In conclusion, muscle quality can be increased in the presence of clinically meaningful weight loss, and is the primary determinant of improved physical function in overweight/obese older women.