The functional disturbances driving “out-of-proportion” dyspnoea in patients with fibrosing interstitial lung disease (f-ILD) showing only mild restrictive abnormalities remain poorly understood. Eighteen patients (10 with idiopathic pulmonary fibrosis) showing preserved spirometry and mildly reduced total lung capacity (≥70% predicted) and 18 controls underwent an incremental cardiopulmonary exercise test with measurements of operating lung volumes and Borg dyspnoea scores. Patients’ lower exercise tolerance was associated with higher ventilation (V̇E)/carbon dioxide (V̇CO2) compared with controls (V̇E/V̇CO2 nadir=35 ± 3 versus 29 ± 2; p < 0.001). Patients showed higher tidal volume/inspiratory capacity and lower inspiratory reserve volume at a given exercise intensity, reporting higher dyspnoea scores as a function of both work rate and V̇E. Steeper dyspnoea-work rate slopes were associated with lower lung diffusing capacity, higher V̇E/V̇CO2, and lower peak O2 uptake (p < 0.05). Heightened ventilatory demands in the setting of progressively lower capacity for tidal volume expansion on exertion largely explain higher-than-expected dyspnoea in f-ILD patients with largely preserved dynamic and “static” lung volumes at rest. •The physiological abnormalities driving “out-of-proportion” dyspnea in mild f-ILD remain unclear.•Despite normal spirometry and total lung capacity typically above 70% predicted, patients showed moderate impairment in DLCO•Exertional dyspnea was related to heightened ventilatory demands and progressively lower capacity for tidal volume expansion•Exertional dyspnea and exercise intolerance were associated with lower DLCO, excess ventilation, and inspiratory constraints•These findings can causally link mild f-ILD to “out-of-proportion” dyspnoea, exposing potential therapeutic targets