We investigated physiological responses and exercise capacity in sedentary young smokers during sub-maximal and maximal test and its impact on dyspnea and exercise intolerance. Fifty sedentary male smokers and non-smokers (age: 24 ± 1 years., weight: 71 ± 9 kg, height: 177.3 ± 4.8 cm, body mass index: 22.6 ± 2.5 kg/m2) underwent two visits with pulmonary function tests, breathing pattern, and inspiratory capacity measurement at rest and during sub-maximal and maximal exercise. Smokers show reduced exercise capacity during six minutes walk test (6-MWT) with decreased walked distance (p < 0.001) and inspiratory capacity (p < 0.05). During cardiopulmonary exercise test (CPET), smokers had higher minute ventilation VE for a given submaximal intensity (p < 0.05) and lower minute ventilation at maximal exercise (p < 0.001). End expiratory lung volume was significantly lower in sedentary smokers at rest (p < 0.05), at ventilatory threshold during exercise (p < 0.05), but not during peak exercise. End inspiratory lung volume was significantly lower in smokers at rest (p < 0.05) and ventilatory threshold (p < 0.05). Cigarette smoking alters lung function during submaximal and maximal exercise. This alteration is manifested by the development of dynamic hyperinflation contributing to exercise capacity limitation.