This study investigated the effects of progressive mild dehydration during cycling on whole-body substrate oxidation and skeletal-muscle metabolism in recreationally active men. Subjects (N = 9) cycled for 120 min at ~65% peak oxygen uptake (VO2peak 22.7 °C, 32% relative humidity) with water to replace sweat losses (HYD) or without fluid (DEH). Blood samples were taken at rest and every 20 min, and muscle biopsies were taken at rest and at 40, 80, and 120 min of exercise. Subjects lost 0.8%, 1.8%, and 2.7% body mass (BM) after 40, 80, and 120 min of cycling in the DEH trial while sweat loss was not significantly different between trials. Heart rate was greater in the DEH trial from 60 to 120 min, and core temperature was greater from 75 to 120 min. Rating of perceived exertion was higher in the DEH trial from 30 to 120 min. There were no differences in VO2, respiratory-exchange ratio, total carbohydrate (CHO) oxidation (HYD 312 ± 9 vs. DEH 307 ± 10 g), or sweat rate between trials. Blood lactate was significantly greater in the DEH trial from 20 to 120 min with no difference in plasma free fatty acids or epinephrine. Glycogenolysis was significantly greater (24%) over the entire DEH vs. HYD trial (433 ± 44 vs. 349 ± 27 mmol · kg−1 · dm−1). In conclusion, dehydration of <2% BM elevated physiological parameters and perceived exertion, as well as muscle glycogenolysis, during exercise without affecting whole-body CHO oxidation.