Sleep restriction (SR) (<6 h) and physical activity (PA) are risk factors for obesity, but little work has examined the inter-related influences of both risk factors. In a free-living environment, 13 overweight/obese adults were sleep restricted for five nights to 6 h time-in-bed each night, with and without regular exercise (45 min/65% VO2max; counterbalanced design). Two days of recovery sleep followed SR. Subjects were measured during a mixed meal tolerance test (MMT), resting metabolic rate, cognitive testing and fat biopsy (n=8). SR increased peak glucose response (+7.3 mg/dl, p = .04), elevated fasting non-esterified fatty acid (NEFA) concentrations (+0.1 mmol/L, p = .001) and enhanced fat oxidation (p < .001) without modifying step counts or PA intensity. Inclusion of daily exercise increased step count (+4,700 steps/day, p < .001) and decreased the insulin response to a meal (p = .01) but did not prevent the increased peak glucose response or elevated NEFA levels. The weekend recovery period improved fasting glucose (p = .02), insulin (p = .02), NEFA concentrations (p = .001) and HOMA-IR (p < .01) despite reduced steps (p < .01) and increased sedentary time (p < .01). Abdominal adipose tissue (AT) samples, obtained after baseline, SR and exercise, did not differ in lipolytic capacity following SR. Fatty acid synthase protein content tended to increase following SR (p = .07), but not following exercise. In a free-living setting, SR adversely affected circulating NEFAs, fuel oxidation and peak glucose response but did not directly affect glucose tolerance or AT lipolysis. SR-associated metabolic impairments were not mitigated by exercise, yet recovery sleep completely rescued its adverse effects on glucose metabolism.