In midlife, women experience hormonal changes due to menopausal transition. A decrease especially in estradiol has been hypothesized to cause loss of muscle mass. This study investigated the effect of menopausal transition on changes in lean and muscle mass, from the total body to the muscle fiber level, among 47–55-year-old women. Data were used from the Estrogenic Regulation of Muscle Apoptosis (ERMA) study, where 234 women were followed from perimenopause to early postmenopause. Hormone levels (estradiol and follicle stimulating hormone), total and regional body composition (dual-energy X-ray absorptiometry (DXA) and computed tomography (CT) scans), physical activity level (self-reported and accelerometer-measured) and muscle fiber properties (muscle biopsy) were assessed at baseline and at early postmenopause. Significant decreases were seen in lean body mass (LBM), lean body mass index (LBMI), appendicular lean mass (ALM), appendicular lean mass index (ALMI), leg lean mass and thigh muscle cross-sectional area (CSA). Menopausal status was a significant predictor for all tested muscle mass variables, while physical activity was an additional significant contributor for LBM, ALM, ALMI, leg lean mass and relative muscle CSA. Menopausal transition was associated with loss of muscle mass at multiple anatomical levels, while physical activity was beneficial for the maintenance of skeletal muscle mass.