Aims/hypothesis: Recent studies have demonstrated that pioglitazone (PIO) has beneficial effects on insulin sensitivity compared with placebo in patients with type 2 diabetes. The effects of PIO and gliclazide (GLIC)-based therapy on insulin sensitivity have not previously been directly compared. This analysis aimed to compare the effects of 52 weeks of treatment with PIO (30-45 mg/day) and GLIC (80-320 mg/day), both titrated to maximum tolerable doses, as monotherapy or in combination with metformin (MET), on insulin sensitivity and lipid parameters known to be related to insulin sensitivity in patients with type 2 diabetes. Methods: We performed an analysis of 1,880 patients with inadequately controlled type 2 diabetes (HbA 1 c 7.5-11.0%) who were participants in two parallelgroup, double-blind, double-dummy, randomised, multicentre, clinical trials. Measures of insulin sensitivity and lipids were assessed. Results: The PIO-and GLIC-based regimens produced similar levels of glycaemic control (HbA 1 c). In both trials, insulin sensitivity as assessed using the homeostasis model assessment was improved in patients receiving PIO, but decreased in those receiving GLIC (mean change, baseline to endpoint: PIO 15.5, GLIC −15.6; p<0.001 and PIO+MET 18.9, GLIC+MET −5.3; p<0.001). Improvements in the atherogenic index of plasma (mean change: PIO −0.17, GLIC −0.08; p<0.001 and PIO+MET −0.17, GLIC+MET −0.02; p<0.001), triglycerides (mean change, mmol/l: PIO+MET −0.62, GLIC+MET −0.22; p< 0.001) and NEFA (mean change, mmol/l: PIO+MET −0.12, GLIC+MET−0.05; p<0.001) were greater in PIO-treated patients than in patients receiving GLIC. Conclusions/ interpretation: The PIO-based regimens resulted in improved insulin sensitivity and more favourable insulin sensitivity-related lipid profiles compared with the GLIC-based regimens. These benefits may be important in the management of cardiovascular risk in patients with type 2 diabetes.