Exercise-induced muscle damage is a well documented phenomenon particularly resulting from eccentric exercise. When eccentric exercise is unaccustomed or is performed with an increased intensity or duration, the symptoms associated with muscle damage are a common outcome and are particularly associated with participation in athletic activity. Muscle damage results in an immediate and prolonged reduction in muscle function, most notably a reduction in force-generating capacity, which has been quantified in human studies through isometric and dynamic isokinetic testing modalities. Investigations of the torque-angular velocity relationship have failed to reveal a consistent pattern of change, with inconsistent reports of functional change being dependent on the muscle action and/or angular velocity of movement. The consequences of damage on dynamic, multi-joint, sport-specific movements would appear more pertinent with regard to athletic performance, but this aspect of muscle function has been studied less often. Reductions in the ability to generate power output during single-joint movements as well as during cycling and vertical jump movements have been documented. In addition, muscle damage has been observed to increase the physiological demand of endurance exercise and to increase thermal strain during exercise in the heat. The aims of this review are to summarise the functional decrements associated with exercise-induced muscle damage, relate these decrements to theoretical views regarding underlying mechanisms (i.e. sarcomere disruption, impaired excitation-contraction coupling, preferential fibre type damage, and impaired muscle metabolism), and finally to discuss the potential impact of muscle damage on athletic performance.