Maximum oxidative capacity of skeletal muscle measured by
in vivo
phosphorus magnetic resonance spectroscopy (
31
P-MRS) declines with age, and negatively affects whole-body aerobic capacity. However, it remains unclear whether the loss of oxidative capacity is caused by reduced volume and function of mitochondria or limited substrate availability secondary to impaired muscle perfusion. Therefore, we sought to elucidate the role of muscle perfusion on the age-related decline of muscle oxidative capacity and ultimately whole-body aerobic capacity. Muscle oxidative capacity was assessed by
31
P-MRS post-exercise phosphocreatine recovery time (τ
PCr
), with higher τ
PCr
reflecting lower oxidative capacity, in 75 healthy participants (48 men, 22–89 years) of the Genetic and Epigenetic Signatures of Translational Aging Laboratory Testing study. Muscle perfusion was characterized as an index of blood volume at rest using a customized diffusion-weighted MRI technique and analysis method developed in our laboratory. Aerobic capacity (peak-VO
2
) was also measured during a graded treadmill exercise test in the same visit. Muscle oxidative capacity, peak-VO
2
, and resting muscle perfusion were significantly lower at older ages independent of sex, race, and body mass index (BMI). τ
PCr
was significantly associated with resting muscle perfusion independent of age, sex, race, and BMI (
p
-value = 0.004, β = −0.34). τ
PCr
was also a significant independent predictor of peak-VO
2
and, in a mediation analysis, significantly attenuated the association between muscle perfusion and peak-VO
2
(34% reduction for β in perfusion). These findings suggest that the age-associated decline in muscle oxidative capacity is partly due to impaired muscle perfusion and not mitochondrial dysfunction alone. Furthermore, our findings show that part of the decline in whole-body aerobic capacity observed with aging is also due to reduced microvascular blood volume at rest, representing a basal capacity of the microvascular system, which is mediated by muscle oxidative capacity. This finding suggests potential benefit of interventions that target an overall increase in muscle perfusion for the restoration of energetic capacity and mitochondrial function with aging.