What is the role of physical activity in the process of human capital accumu-lation? Brain research provides growing evidence of the importance of physical activity for various aspects of cognitive functions. An increasingly sedentary lifestyle could thus be not only harmful to population health, but also disrupt human capital accumulation. This paper analyzes the effects of on-campus recreational sports and exercise on educational outcomes of university students. To identify causal effects, we randomize financial incentives to encourage students' participation in on-campus sports and exercise. The incentives increased participation frequency by 0.26 times per week (47%) and improved grades by 0.14 standard deviations. This effect is primarily driven by male students and students at higher quantiles of the grade distribution. Results from survey data suggest that students substitute off-campus with on-campus physical activities during the day but do not significantly increase the overall frequency. Our findings suggest that students spend more time on campus and are better able to integrate studying and exercising, which may enhance the effectiveness of studying and thus improve student performance.