This study examined the effects of aerobic exercise without weight loss, a hypocaloric high monounsaturated fat diet, and diet plus exercise (D+E) on total abdominal and visceral fat loss in obese postmenopausal women with type 2 diabetes. Thirty-three postmenopausal women (body mass index, 34.6 ± 1.9 kg/m2) were assigned to one of three interventions: a hypocaloric high monounsaturated fat diet alone, exercise alone (EX), and D+E for 14 wk. Aerobic capacity, body composition, abdominal fat distribution (magnetic resonance imaging), glucose tolerance, and insulin sensitivity were measured preand postintervention. Body weight (∼4.5 kg) and percent body fat (∼5%) were decreased (P < 0.05) with the D and D+E intervention, whereas only percent body fat (∼2.3%) decreased with EX. Total abdominal fat and sc adipose tissue (SAT) were reduced with the D and D+E interventions (P < 0.05), whereas visceral adipose tissue (VAT) decreased with the D+E and EX intervention, but not with the D intervention. EX resulted in a reduction in total abdominal fat, VAT, and SAT (P < 0.05) despite the lack of weight loss. The reductions in total abdominal fat and SAT explained 32.7% and 9.7%, respectively, of the variability in the changes in fasting glucose levels, whereas the reductions in VAT explained 15.9% of the changes in fasting insulin levels (P < 0.05). In conclusion, modest weight loss, through either D or D+E, resulted in similar improvements in total abdominal fat, SAT, and glycemic status in postmenopausal women with type 2 diabetes; however, the addition of exercise to diet is necessary for VAT loss. These data demonstrate the importance of exercise in the treatment of women with type 2 diabetes.