Older adults can experience periods of inactivity related to disease or illness, which can hasten the development of physical disability, in part, through reductions in skeletal muscle strength and power. To date no study has characterized adaptations in skeletal muscle physical function in response to reduced daily physical activity. Participants (15 men, aged 69 ± 2 years; 15 women, aged 68 ± 4 years) restricted their daily steps (<750 steps/day) while being energy restricted (–500 kcal/day) for 2 weeks before returning to normal activity levels during recovery (RC; 1 week). Before and after each phase, measures of knee extensor isometric maximum voluntary contraction (MVC), time-to-peak torque, and physical function were performed and muscle biopsies were taken from a subset of participants. Following the energy restriction and step-reduction phase (ER+SR), MVC was reduced by 9.1 and 6.1 Nm in men and women, respectively (p = 0.02), which returned to baseline after RC in men, but not women (p = 0.046). Maximum isometric tension in MHC IIA fibres (p < 0.01) and maximum power production in MHC I and IIA (p = 0.05) were increased by 14%, 25%, and 10%, respectively, following ER+SR. Reductions in muscle strength could not be explained by changes in single muscle fibre function in a subsample (n = 9 men) of volunteers. These data highlight the resilience of physical function in healthy older men in the face of an acute period of ER+SR and demonstrate sex-based differences in the ability to recover muscle strength upon resumption of physical activity.