The two primary perturbations resulting in hyperglycaemia in type 2 diabetes are insulin resistance and insulin deficiency. Insulin resistance occurs in peripheral organs (muscle and fat) leading to decreased glucose uptake and utilisation and in liver leading to increased hepatic glucose production. Thiazolidinediones, synthetic ligands for peroxisome proliferator-activated receptor gamma (PPARγ) can modulate the expression of genes influencing carbohydrate and lipid metabolism. Pioglitazone, a recently introduced thiazolidinedione, improves glycaemic control and lipid profiles in people with type 2 diabetes. Some of the possible mechanisms of improving glycaemic control include increases in glucose transporters 1 and 4, enhancement of insulin signalling, decrease in tumour necrosis factor-α, reduction of plasma free fatty acid, and decrease in phosphoenolpyruvate carboxykinase. Together, these can increase glucose uptake and utilisation in the peripheral organs and decrease gluconeogenesis in the liver. Possible mechanisms resulting in more desirable lipid profiles include an increase in phosphodiesterase 3B, resulting in reduced intracellular lipolysis in adipocytes, and an increase in lipoprotein lipase resulting in enhanced clearance of triglyceride-rich lipoproteins. In brief, pioglitazone reduces hepatic and peripheral insulin resistance.