Exercise training (EX) and diet restriction (DR) are essential for effective management of obesity and insulin resistance in diabetes mellitus. However, whether these interventions ameliorate the limited exercise capacity and impaired skeletal muscle function in diabetes patients remains unexplored. Therefore, we investigated the effects of EX and/or DR on exercise capacity and skeletal muscle function in diet-induced diabetic mice. Male C57BL/6J mice that were fed a high-fat diet (HFD) for 8 weeks were randomly assigned for an additional 4 weeks to 4 groups: control, EX, DR, and EX+DR. A lean group fed with a normal diet was also studied. Obesity and insulin resistance induced by a HFD were significantly but partially improved by EX or DR and completely reversed by EX+DR. Although exercise capacity decreased significantly with HFD compared with normal diet, it partially improved with EX and DR and completely reversed with EX+DR. In parallel, the impaired mitochondrial function and enhanced oxidative stress in the skeletal muscle caused by the HFD were normalized only by EX+DR. Although obesity and insulin resistance were completely reversed by DR with an insulin-sensitizing drug or a long-term intervention, the exercise capacity and skeletal muscle function could not be normalized. Therefore, improvement in impaired skeletal muscle function, rather than obesity and insulin resistance, may be an important therapeutic target for normalization of the limited exercise capacity in diabetes. In conclusion, a comprehensive lifestyle therapy of exercise and diet normalizes the limited exercise capacity and impaired muscle function in diabetes mellitus.