Background Diet is a major determinant of obesity; however, findings from the studies examining how dieting to lose weight affects weight gain have been inconclusive. Purpose Our aim was to examine the longitudinal association of frequency of dieting for weight loss with (a) obesity status and (b) body mass index (BMI) change. Methods We used data from Waves 9 (2009) and 10 (2010) of the Household Income and Labour Dynamics in Australia (HILDA) survey. Binominal logistic regression estimated the association of frequency of dieting in 2009 on probability of obesity in 2010. Multinomial logistic regression estimated the association of frequency of dieting in 2009 on the probability of BMI gain versus BMI maintenance and BMI loss between 2009 and 2010. The analysis sample size was 8824. Results Compared to those who were never on a diet in the previous year, the odds of obesity were 1.9, 2.9, and 3.2 times higher among those who were on a diet once, more than once, and always, respectively. Similarly, the odds of BMI gain versus BMI maintenance and also versus BMI loss were higher among those who dieted than those who did not. Conclusions Dieting to lose weight can contribute to the risk of future obesity and weight gain. Losing weight requires a commitment to change one’s lifestyle and a sustained effort to maintain a healthy diet and engage in physical activity.