Osteoporosis (low bone strength) and sarcopenia (low muscle mass, strength and/or impaired function) often co-exist (hence the term 'sarco-osteoporosis') and have similar health consequences with regard to disability, falls, frailty and fractures. Exercise and adequate nutrition, particularly with regard to vitamin D, calcium and protein, are key lifestyle approaches that can simultaneously optimize bone, muscle and functional outcomes in older people, if they are individually tailored and appropriately prescribed in terms of the type and dose. Not all forms of exercise are equally effective for optimizing musculoskeletal health. Regular walking alone has little or no effect on bone or muscle. Traditional progressive resistance training (PRT) is effective for improving muscle mass, size and strength, but it has mixed effects on muscle function and falls which may be due to the common prescription of slow and controlled movement patterns. At present, targeted multi-modal programs incorporating traditional and high-velocity PRT, weight-bearing impact exercises and challenging balance/mobility activities appear to be most effective for optimizing musculoskeletal health and function. Reducing and breaking up sitting time may also help attenuate muscle loss. There is also evidence to support an interaction between exercise and various nutritional factors, particularly protein and some multi-nutrient supplements, on muscle and bone health in the elderly. This review summary provides an overview of the latest evidence with regard to the optimal type and dose of exercise and the role of various nutritional factors for preventing bone and muscle loss and improving functional capacity in older people.