Sweat evaporation can be a key thermoregulatory mechanism and it causes a loss of water from all compartments of the body. Hypohydration can also develop with restricted fluid intake or with intake of diuretics. Hypohydration can affect physical and/or mental performance and/or have implications for dietary recommendations. A variety of different types and modes of exercise performance can be influenced by hydration state. Reviews of the published literature are currently most conclusive for endurance exercise. Dehydration equivalent to 2% body mass loss during exercise in a hot environment (31–32°C) impairs endurance performance, but when the exercise is performed in a temperate environment (20–21°C) a 2% body mass loss appears to have a lesser and inconsequential effect. In cold environments a body mass loss >2% may be tolerable for endurance exercise. There is a less conclusive picture as to the effects of hypohydration on other types of physical performance, including strength and power activities, team sports and the skills component of many sports, and for mental performance. A number of physiological mechanisms are responsible for the effects observed. Fluid consumption can be used to attenuate the development of a water deficit or to correct it. The composition and temperature of a drink and the volume and rate of its consumption can all influence the physiological responses to ingestion and can impact on exercise performance.