Background and aims: Decreasing energy intake relative to energy expenditure is the indisputable tenet of weight loss. In addition to caloric restriction modification of the type of dietary fat may provide further benefits. The aim of the present study was to examine the effect of energy restriction alone and with dietary fat modification on weight loss and adiposity, as well as on risk factors for obesity related disease. Methods and results: One-hundred and fifty overweight men and women were randomized into a 3 month controlled trial with four low fat (30% energy) dietary arms: (1) isocaloric (LF); (2) isocaloric with 10% polyunsaturated fatty acids (LF-PUFA); (3) low calorie (LF-LC) (2 MJ); (4) low calorie with 10% PUFA (LF-PUFA-LC). Primary outcomes were changes in body weight and body fat and secondary outcomes were changes in fasting levels of leptin, insulin, glucose, lipids and erythrocyte fatty acids. Changes in dietary intake were assessed using 3 day food records. One-hundred and twenty-two participants entered the study and 95 completed the study. All groups lost weight and body fat (P < 0.0001 time effect for both), but the LC groups lost more weight (P Z 0.026 for diet effect). All groups reduced total cholesterol levels (P < 0.0001 time effect and PZ 0.017 intervention effect), but the LC and PUFA groups were better at reducing triacylglycerol levels (PZ 0.056 diet effect). HDL increased with LF-LC and LF-PUFA but not with LF-PUFA-LC (0.042 diet effect). The LF and LF-LC groups reported greater dietary fat reductions than the two PUFA groups (PZ 0.043). Conclusion: Energy restriction has the most potent effect on weight loss and lipids, but fat modification is also beneficial when energy restriction is more modest.