The influence of the source of dietary fat on postprandial thermogenesis and substrate oxidation rates, was examined in twelve postmenopausal women aged 57–73 years, with BMI 21·9–38·3 kg/m2. A single blind, randomised, paired comparison of two high-fat, isoenergetic, mixed test meals was conducted. The major source of fat was either cream (CREAM) or extra virgin olive oil (EVOO). RMR, diet-induced thermogenesis (DIT) and substrate oxidation rates over 5 h were measured by indirect calorimetry. There were no differences in body weight, RMR, fasting carbohydrate or fat oxidation rates between the two occasions. DIT (EVOO 97 (sd 46) v. CREAM 76 (sd 69) kJ/5 h and EVOO 5·2 (sd 2·5) v. CREAM 4·1 (sd 3·7)% energy) did not differ between the two test meals. The postprandial increase in carbohydrate oxidation rates, relative to their respective fasting values (ΔCOX), was significantly lower following the EVOO meal (EVOO 10·6 (sd 8·3) v. CREAM 17·5 (sd 10) g/5 h; paired t test, P=0·023), while postprandial fat oxidation rates (ΔFOX) were significantly higher (EVOO 0·0 (sd 4·4) v. CREAM -3·6 (sd 4·0) g/5 h; P=0·028). In the eight obese subjects, however, DIT was significantly higher following the EVOO meal (EVOO 5·1 (sd 2·0) v. CREAM 2·5 (sd 2·9) %; P=0·01). This was accompanied by a significantly lower ΔCOX (EVOO 10·9 (sd 9·9) v. CREAM 17·3 (sd 10·5) g/5 h; P=0·03) and significantly higher ΔFOX (EVOO 0·11 (sd 4·4) v. CREAM −4·1 (sd 4·5) g/5 h, P=0·034). The present study showed that olive oil significantly promoted postprandial fat oxidation and stimulated DIT in abdominally obese postmenopausal women.