This study will test the hypothesis that fat oxidation rates during exercise are poorly responsive to training in T2DM, being correlated to the degree of muscle mitochondrial adaptation. The effects of a 16-week intervention (8 weeks of exercise intervention followed by 10-12 weeks of weight loss intervention) on systemic fat oxidation during exercise and mitochondrial capacity will be compared between 3 sedentary subject groups; 15 lean subjects, 15 overweight subjects with T2DM, and 15 overweight subjects without diabetes. The first aim is to compare the degree of improvement in fat oxidation during submaximal exercise obtained by indirect calorimetry. The second and third aims are, respectively, to compare the degree of improvement in mitochondrial content and oxidative capacity in muscle biopsy samples. The fourth aim is to determine whether fat oxidation from non-plasma sources is increased by the intervention. The final aim is to examine whether improvements in fat oxidation predict degree off success in a subsequent weight loss program.