Starving yourself will cause a loss of LBM. A loss of LBM will result in your calorie burning capabilities to be lessened (you now have a 1.5L Engine instead of the 5L V8 you had before) Also, as Tom mentioned severely reduced calorie intake will slow your BMR. However exercise and a reduced calorie intake (negative calorie diet) will offset some of that loss. Its the women that eat a couple of carrots and 10calorie cup-a-soup that really hurt themselves with this sort of nonsense. The trouble is that not that many are really willing to work at it. Losing weight, or rather losing fat is about 100X more difficult that it is to put on.
So, to answer your question (as best I can)
Work out your calorie needs, then work out your target heart rate for fat burn, get a heart monitor and exercise that that intensity.
If you go too fast and put too much demand for power you will only be burning up glycogen (large glucose molecules stored in the muscle, this is what actually gives an athlete that 'toned' look) You need to work at a reduced rate in order to give your body the time to refine the fat down into a fuel it can use. Its a little like having an oil well in your yard, you actually need some time from pump to tank to refine it. Think of glycogen as 95 octane.