Losing weight requires that you take in less calories than you burn over a prolonged period of time. Your body will then begin to use its fat stores for energy causing weight loss. Since there are two sides of this weight loss equation (calories eaten and calories burned) you can manipulate either one to achieve your goal: exercise more or eat less.
Weight Loss Math
To figure out which (diet or exercise) works better, you need to understand the numbers behind weight loss. A calorie deficit is the difference between what you take in and what you burn. The size of your calorie deficit will determine how quickly you lose weight. A deficit of 500 calories per day will result in a loss of one pound per week. Double it to 1,000 calories per day and you'll lose two pounds per week.
If someone who needs 2,000 calories each day (use the calorie calculator to see how many calories your body uses each day) wants to lose one pound per week, they'll need to either exercise to burn an additional 500 calories per day or eat 500 calories less than they use. Is it easier to exercise to burn that additional energy or is it easier to eat less?
Burning 500 calories through exercise is possible but it isn't easy. You'll probably have to run 5-6 miles each day to burn that kind of energy. If you're big into running or other high intensity exercises, you can probably lose weight through physical activity alone. This 500 calorie example is if you only want to lose one pound each week.
If you want to lose two pounds per week, creating a deficit of 1,000 calories through exercise alone is a lot harder and can be out of reach for most people. To burn that much energy, you would need to workout two times per day and at a very high intensity (running about 10-12 miles).
Creating a deficit of 500 calories per day through dieting (to lose one pound per week) isn't hard to accomplish. All you need to do is cut out 500 calories from your daily intake: if you use 2,000 calories each day, (use the calorie calculator for your own body's energy needs) simply eat 1,500 calories.
Cutting out about 150 calories from every meal will be enough. If you want to lose two pounds per week, creating a 1,000 calorie deficit will be extremely hard and unhealthy. If you burn 2,000 calories per day, you'll only be able to eat 1,000 calories. At this level, it will be close to impossible to get all the vitamins and minerals your body needs to properly function and you'll risk entering starvation mode.
The Bottom Line
If you don't need to lose large amounts of weight, small tweaks to your diet or exercise routine will help. For large weight loss goals, it is much easier and healthier to combine increased physical activity with a proper diet. If you only exercise or only diet, you'll miss out on key health benefits that are unique to one of the two.