Obesity remains a serious relevant public health concern throughout the world despite related countermeasures being well understood (i.e., mainly physical activity and an adjusted diet). Among different nutritional approaches, there is a growing interest in ketogenic diets (KDs) to manipulate body mass (BM) and to enhance fat mass (FM) loss. KDs reduce the daily amount of carbohydrate intake drastically. This results in increased fatty acid utilization, leading to an increase in blood ketone bodies (KBs) (acetoacetate [AcAc], 3-β-hydroxybutyrate [BHB], and acetone), and therefore metabolic ketosis. For many years, nutritional intervention studies have focused on reducing dietary fat with little or conflicting positive results over the long-term. Moreover, current nutritional guidelines for athletes propose carbohydrate-based diets to augment muscular adaptations. This review discusses the physiological basis of KDs and their effects on BM reduction and body composition improvements in sedentary individuals combined with different types of exercise (resistance training [RT] or endurance training [ET]) in individuals with obesity and athletes. Ultimately, we discuss the strengths and the weaknesses of these nutritional interventions together with precautionary measures that should be observed in both individuals with obesity and athletic populations. A literature search from 1921 to April 2021 using MEDLINE, GOOGLE SCHOLAR, PUBMED, WEB OF SCIENCE, SCOPUS, and SPORTDISCUS databases were used to identify relevant studies. In summary, based on the current evidence, KDs are an efficient method to reduce BM and body fat in both individuals with obesity and athletes. However, these positive impacts are mainly because of the appetite suppressive effects of KDs, which can decrease daily calorie intake. Therefore, KDs do not have any superior benefits to non-KDs in BM and body fat loss in individuals with obesity and athletic populations in an isocaloric situation. In sedentary individuals with obesity, it seems that fat-free mass (FFM) changes appear to be as great, if not greater, than decreases following a low-fat diet (LFD). In terms of lean mass, it seems that following a KD can cause FFM loss in resistance-trained individuals. In contrast, the FFM-preserving effects of KDs are more efficient in endurance-trained compared to resistance-trained individuals.