For over a century, the hypothesis of temperature compensation, the maintenance of similar biological rates in species from different thermal environments, has remained controversial. An alternative idea, that fitness is greater at higher temperatures (the thermodynamic effect), has gained increasing traction. This alternative hypothesis is also being used to understand large-scale biodiversity responses to environmental change. Yet evidence in favour of each of these contrasting hypotheses continues to emerge. In consequence, the fundamental nature of organismal thermal responses and its implications remain unresolved. Here we investigate these ideas explicitly using a global dataset of 619 observations of four categories of organismal performance, spanning 14 phyla and 403 species. In agreement with both hypotheses, we show a positive relationship between the temperature of maximal performance rate (Topt) and environmental temperature (Tenv) for all traits. Next we demonstrate that relationships between Tenv and the maximal performance rate (Umax) are rarely significant and positive, as expected if a thermodynamic effect predominates. By contrast, a positive relationship between Topt and Umax is always present, but markedly weaker than theoretically predicted. These outcomes demonstrate that while some form of thermodynamic effect exists, ample scope is present for biochemical and physiological adaptation to thermal environments in the form of temperature compensation.