Physical fatigue crucially influences our decisions to partake in effortful action. However, there is a limited understanding of how fatigue impacts effort-based decision-making at the level of brain and behavior. We use functional magnetic resonance imaging to record markers of brain activity while human participants engage in uncertain choices for prospective physical effort, before and after bouts of exertion. Using computational modeling of choice behavior we find that fatiguing exertions cause participants to increase their subjective cost of effort, compared to a baseline/rested state. We describe a mechanism by which signals related to motor cortical state in premotor cortex influence effort value computations, instantiated by insula, thereby increasing an individual's subjective valuation of prospective physical effort while fatigued. Our findings provide a neurobiological account of how information about bodily state modulates decisions to engage in physical activity.