High-protein (HP) intake during weight loss (WL) therapy is often recommended because it reduces the loss of lean tissue mass. However, HP intake could have adverse effects on metabolic function, because protein ingestion reduces postprandial insulin sensitivity. In this study, we compared the effects of ∼10% WL with a hypocaloric diet containing 0.8 g protein/kg/day and a hypocaloric diet containing 1.2 g protein/kg/day on muscle insulin action in postmenopausal women with obesity. We found that HP intake reduced the WL-induced decline in lean tissue mass by ∼45%. However, HP intake also prevented the WL-induced improvements in muscle insulin signaling and insulin-stimulated glucose uptake, as well as the WL-induced adaptations in oxidative stress and cell structural biology pathways. Our data demonstrate that the protein content of a WL diet can have profound effects on metabolic function and underscore the importance of considering dietary macronutrient composition during WL therapy for people with obesity.