The ability of insulin to stimulate muscle glucose disposal and inhibit adipose tissue lipolysis is impaired in patients with type 2 diabetes. The progression from normal glucose tolerance and/or impaired glucose tolerance to type 2 diabetes only occurs when insulin secretory function declines to a degree that circulating insulin concentrations are no longer able to overcome muscle and adipose tissue insulin resistance. Although, ambient plasma insulin concentrations are not sufficiently high to maintain euglycaemia in patients with type 2 diabetes, absolute plasma insulin concentrations in these individuals are as high, if not higher, than in nondiabetic subjects. Since the plasma concentrations of insulin, or free fatty acids (FFAs), or both, are elevated in patients with type 2 diabetes secondary to muscle and adipose tissue insulin resistance, hypertriglyceridaemia is common in these individuals. Improvement in glycaemic control with insulin or insulin secretagogues is achieved by raising plasma insulin concentrations to a level high enough to overcome the insulin resistance. This is not the case with thiazolidinediones (TZDs): glycaemic control is associated with lower plasma insulin concentration. Compounds that improve insulin sensitivity and lead to lower glucose and insulin concentrations may have unique clinical benefit in the treatment of patients with type 2 diabetes.