OBJECTIVE: To determine whether increased daily physical activity improves mitochondrial function and/or lipid oxidation in type 2 diabetes. RESEARCH DESIGN AND METHODS: Volunteers with (n = 10) and without (n = 10) type 2 diabetes were matched for habitual physical activity, age, sex, and weight. Basal and maximal mitochondrial activity, physical activity, and resting substrate oxidation were measured at baseline and after 2 and 8 weeks of increased physical activity. RESULTS: Baseline physical activity (6,450 +/- 851 vs. 7,638 +/- 741 steps/day), basal ATP use (12 +/- 1 vs. 12 +/- 1 micromol x ml(-1) x min(-1)), phosphocreatine recovery from exercise (31 +/- 5 vs. 29 +/- 3 s), and basal lipid oxidation (0.57 +/- 0.07 vs. 0.65 +/- 0.06 mg x kg body wt(-1) x min(-1)) were similar in people with and without type 2 diabetes. There was a significant increase in physical activity after 8 weeks (12,322 +/- 1,979 vs. 9,187 +/- 1,159 steps/day, respectively). Following increased physical activity, there were no changes in basal ATP use or phosphocreatine recovery after exercise in either group. Basal lipid oxidation increased after 8 weeks of increased physical activity in people with type 2 diabetes (0.79 +/- 0.08 mg x kg(-1) x min(-1)) but not people without (0.68 +/- 0.13 mg x kg body wt(-1) x min(-1)). CONCLUSIONS: Resting and maximal ATP turnover are not impaired in people with well-controlled type 2 diabetes compared with control subjects matched for physical activity as well as age and weight. Increased unsupervised daily physical activity is sustainable and improves lipid oxidation independent of change in mitochondrial activity in people with type 2 diabetes.