Undernutrition in older adults is mainly addressed by oral nutritional supplements, which do not affect physical functioning. In this study, we tested a novel oral nutritional supplement that included whey and casein protein, ursolic acid, free branch-chained amino acids and vitamin D against a standard supplement. We included older adults (>65y) with (or at risk of) undernutrition (n=82) and randomized them to 12 weeks of novel or standard supplement. Both groups showed significant increases in body mass. No within or between-group differences in lean body mass were observed. Fat mass increased significantly more in the standard than the novel supplement group (time*treatment effect P=0.045). The novel supplement group showed a larger improvement in walking performance on distances of 4m (treatment x time interaction P=0.048) and 400m (treatment x time interaction P=0.038) than the standard treatment group. Gene sets related to mitochondrial functioning and oxidative phosphorylation were upregulated in the novel supplement group and downregulated in the standard supplement group. We conclude that a 12-week intervention with the novel supplement improved walking performance both during short and long distance as compared to a standard supplement, which can largely be explained by increased mitochondrial functioning in the group receiving the novel supplement.