Worsening glycaemic control in type 2 diabetes mellitus relates to a decline in beta-cell function, associated with impaired negative feedback regulation of insulin release. Insulin resistance, the 'traditional' cornerstone defect of type 2 diabetes, leads to an array of adverse effects on beta cells, including hypertrophy, apoptosis and those caused by lipotoxicity and glucotoxicity. In particular, increased levels of free fatty acids and their metabolites are thought to diminish both insulin synthesis and glucose-stimulated insulin secretion. Thiazolidinediones are synthetic peroxisome proliferator-activated receptor-gamma agonists that decrease insulin resistance but, as in vitro and in vivo studies suggest, may have direct beneficial effects on pancreatic beta cells. Troglitazone, for example, demonstrated improvements in insulin secretory capacity in isolated pancreatic islets from Wistar rats and a hamster beta-cell line. In vivo studies reveal thiazolidinediones promote beta-cell survival and regranulation as well as maintenance of beta-cell mass and reduction in amyloid deposition. Clinical evidence for thiazolidinediones is largely derived from comparative trials, mainly against sulfonylureas and metformin. Data at 2 years from a number of trials are now available and establish the positive effects of thiazolidinediones on glycaemic control. Empirical evidence showing decreases in fasting plasma insulin levels with pioglitazone and rosiglitazone indicate thiazolidinediones also improve insulin sensitivity. A possible effect of thiazolidinediones on normalising asynchronous insulin secretion, as assessed in a short-term placebo-controlled study, is less established. However, recent and ongoing clinical studies are focusing attention on verifying animal and other data, which support the notion that thiazolidinediones have beneficial effects on beta-cell function. These clinical studies have shown thiazolidinediones capable of preventing or delaying the development of type 2 diabetes in a high-risk population; restoring the first-phase insulin response; and improving secretory responses to oscillations in plasma glucose levels. Many of these effects appear to be independent of improvements in insulin sensitivity. Other research efforts are examining the potential cardiovascular protective effects of thiazolidinediones. Available data imply thiazolidinediones are associated with cardiovascular risk reduction, although results from large, clinical outcome trials, currently in progress, are still needed. Improved understanding of the role that declining beta-cell function has in the development of type 2 diabetes has drawn attention to the need for hypoglycaemic agents that can address this process. Emerging evidence suggests thiazolidinediones offer specific benefits for preventing or delaying the decline in beta-cell function and, thereby, a substrate for early intervention efforts aimed at lowering the worldwide burden of type 2 diabetes.