Background: The interaction between physical activity, skeletal muscle health, and adiposity has been explored in normal weight and overweight/obesity grouped together; however, the overall risks associated with being overweight are less than those observed with obesity and can be confounded by disparities in both sex and race. Thus, the present study sought to investigate the intricate interplay of daily physical activity and skeletal muscle oxidative capacity (SMOC) in overweight and obesity, while exploring how sex and race impact this dynamic relationship. Methods: One hundred and forty participants were grouped by body mass index (BMI) as overweight (n = 73; BMI textgreater25–textless30 kg/m2) or obese (n = 67; BMI ≥30 kg/m2). SMOC was assessed using near‐infrared spectroscopy and daily physical activity was assessed for 7 days using accelerometry. Results: Overweight individuals exhibited a higher (p = 0.004) SMOC and engaged in more (p = 0.007) vigorous physical activity compared to obese individuals. In addition, SMOC was lower (p = 0.005) in obese non‐Hispanic Black (NHB) men compared to overweight NHB men. No relationships between physical activity and SMOC were observed. Conclusion: Physical activity is not associated with differences in SMOC in overweight and obesity. Obese individuals engage in less vigorous physical activity and exhibit lower SMOC compared to overweight individuals and these differences are emphasised in NHB men.