Impaired metabolism of fatty acids is associated with obesity and type 2 diabetes (T2D). Based on evidence in lean adults, the expected response of skeletal muscle to aerobic training is an increase in the oxidation of fatty acids. However, considerably less is known about the response of fat oxidation to aerobic training in those with obesity and/or T2D. Purpose. (1) To determine if sedentary overweight adults with and without type 2 diabetes exhibit significant improvements in fatty acid metabolism at rest and during physical activity due to endurance training. (2) To compare changes in the oxidation of intramuscular triacylglycerols (IMTG) during sub-maximal exercise between those with and without T2D. Methods. 13 (10 without T2D, 3 with T2D) overweight (BMI: 28-40 kg/m²) men and women aged 28-55 completed an 8-week aerobic exercise intervention. Pre and post intervention, all subjects underwent a DEXA, maximal graded exercise test, and indirect calorimetry with non-radioactive labeled isotopes palmitate and acetate to determine energy expenditure, fat oxidation, and source of fatty acids for oxidation at rest and during exercise. Results. VO₂max improved by an average of 14% (40.8±1.6 to 46.5±1.7ml/kg LBM/min) in the OW group (p<0.01) and 13.4% (34.8+4.5 to 38.0+1.7 ml/kg/LBM/min) in the T2D group (p=0.10). A non-significant increase in whole body fat oxidation during exercise was measured in both the OW (6.2%) and T2D (5.1%) group. There were no changes in whole body fat oxidation at rest in either group. Before and after intervention, IMTG oxidation during exercise was 4.13±1.7 and 5.5±2.3 uMol/kg LBM/min in OW and 3.42±1.9 and 2.41±2.8 uMol/kg LBM/min in T2D. These changes were not significant due to the intervention (p=0.62). Conclusions. Eight weeks of moderate intensity aerobic exercise results in increased cardiorespiratory fitness but not a significant increase in whole body fatty acid oxidation during rest and exercise in overweight adults with or without type 2 diabetes. Moreover, oxidation of fatty acids from IMTG was not enhanced by the 8-week intervention.