The best ways to reduce body fat is to both redesign your diet and stick to a schedule of exercise that regularly burns calories. The body gains fat when excess calories are consumed but not burned off through exercise, so sticking to a diet that reduces your calorie intake is the first step in the effort to reduce body fat. You don't necessarily have to eat less fatty foods, although it is a good idea to do so. The idea is to reduce calorie intake, not necessarily fat intake.
A good exercise routine to help reduce body fat will be one that increases the heart rate and keeps it there for a sustained period of time. Walking or running on a treadmill, using an elliptical machine, or riding a bicycle indoors or outdoors are all good ways to ramp up the heart rate to the optimal fat burning zones. You can calculate your optimal heart rate zone by either visiting a trainer at your local gym or using one of the many heart rate calculators available online. You don't necessarily want to work as hard as you possibly can; rather, you want to hit your target zone and work at staying there.
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Cardiovascular workouts are a great step in the right direction, but you will also want to include a weight training workout in your effort to reduce body fat. Muscle tissue has a greater capacity for burning calories than fat tissue does, meaning the stronger you are, the more quickly you will reduce your body fat. The best thing about building muscle is that your more muscular body will burn fat throughout the day, not just while you work out at the gym.
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When designing your new diet, it is not necessary to cut out all your favorite foods. In fact, doing so may be counterproductive, as you will be more likely to binge after several days or weeks of dieting. The idea is to reduce the amount of calories you take in, so eating less of your favorite foods will do more to benefit your effort to reduce body fat than simply eliminating those foods altogether. Choose foods that have a lower caloric content and foods that promote high energy. Fruits and vegetables are always a good choice, but don't forget to include a sufficient amount of protein.