P>Objectives By using tracer techniques, we explored the metabolic mechanisms by which pioglitazone treatment for 16 weeks improves oral glucose tolerance in patients with type 2 diabetes when compared to subjects without diabetes. Methods In all subjects, before and after treatment, we measured rates of tissue glucose clearance (MCR), oral glucose appearance (RaO) and endogenous glucose production (EGP) during a (4-h) double tracer oral glucose tolerance test (OGTT) (1-14C-glucose orally and 3-3H-glucose intravenously). Basal hepatic insulin resistance index (HepIR) was calculated as EGPxFPI. beta-cell function was assessed as the incremental ratio of insulin to glucose (delta I/delta G) during the OGTT. Results Pioglitazone decreased fasting plasma glucose concentration (10 center dot 5 +/- 0 center dot 7 to 7 center dot 8 +/- 0 center dot 6 mm, P < 0 center dot 0003) and HbA1c (9 center dot 7 +/- 0 center dot 7 to 7 center dot 5 +/- 0 center dot 5%, P < 0 center dot 003) despite increased body weight and no change in plasma insulin concentrations. This was determined by a decrease both in fasting EGP (20 center dot 0 +/- 1 center dot 1 to 17 center dot 3 +/- 0 center dot 8 mu mol/kg(ffm) min, P < 0 center dot 005) and HepIR (from 8194 declined by 49% to 3989, P < 0 center dot 002). During the OGTT, total glucose Ra during the 0- to 120-min time period following glucose ingestion decreased significantly because of a reduction in EGP. During the 0- to 240-min time period, pioglitazone caused only a modest increase in MCR (P < 0 center dot 07) but markedly increased delta I/delta G (P = 0 center dot 003). The decrease in 2h-postprandial hyperglycaemia correlated closely with the increase in delta I/delta G (r = -0 center dot 76, P = 0 center dot 004) and tissue clearance (r = -0 center dot 74, P = 0 center dot 006) and with the decrease in HepIR (r = 0 center dot 62, P = 0 center dot 006). Conclusions In diabetic subjects with poor glycaemic control, pioglitazone improves oral glucose tolerance mainly by enhancing the suppression of EGP and improving beta-cell function.