The thiazolidinediones (TZDs) or 'glitazones' are a new class of oral antidiabetic drugs that improve metabolic control in patients with type 2 diabetes through the improvement of insulin sensitivity. TZDs exert their antidiabetic effects through a mechanism that involves activation of the gamma isoform of the peroxisome proliferator-activated receptor (PPAR gamma), a nuclear receptor. TZD-induced activation of PPAR gamma alters the transcription of several genes involved in glucose and lipid metabolism and energy balance, including those that code for lipoprotein lipase, fatty acid transporter protein, adipocyte fatty acid binding protein, fatty acyl-CoA synthase, malic enzyme, glucokinase and the GLUT4 glucose transporter. TZDs reduce insulin resistance in adipose tissue, muscle and the liver. However, PPAR gamma is predominantly expressed in adipose tissue. It is possible that the effect of TZDs on insulin resistance in muscle and liver is promoted via endocrine signalling from adipocytes. Potential signalling factors include free fatty acids (FFA) (well-known mediators of insulin resistance linked to obesity) or adipocyte-derived tumour necrosis factor-alpha (TNF-alpha), which is overexpressed in obesity and insulin resistance. Although there are still many unknowns about the mechanism of action of TZDs in type 2 diabetes, it is clear that these agents have the potential to benefit the full 'insulin resistance syndrome' associated with the disease. Therefore, TZDs may also have potential benefits on the secondary complications of type 2 diabetes, such as cardiovascular disease.