Targeting metabolic determinants of exercise performance with pharmacological agents that would mimic/potentiate the effects of exercise represents an attractive clinical alternative to counterbalance the poor exercise capacity in patients with type 2 diabetes mellitus (T2DM). We examined the effect of 1-yr treatment with the insulin sensitizer peroxisome proliferator-activated receptor (PPAR)γ agonist rosiglitazone on aerobic exercise capacity and body fat composition/distribution in men with T2DM and stable coronary artery disease (CAD). One-hundred four men (age: 64 ± 7 yr; body mass index: 30.0 ± 4.4 kg/m2) with T2DM and CAD were randomized to receive rosiglitazone or placebo for 1 yr. Aerobic exercise capacity (exercise duration) was assessed with a maximal treadmill test, and body composition/distribution were assessed by dual-energy X-ray absorptiometry/computed tomography scans. At 1 yr, patients with T2DM under PPARγ agonist treatment showed a reduction in aerobic exercise capacity compared with the control group (exercise duration change, -31 ± 8 versus 7 ± 11 s, P = 0.009). Significant increases in body fat mass (3.1 ± 0.4 kg, 12%), abdominal and mid-thigh subcutaneous adipose tissue (AT) levels, and mid-thigh skeletal muscle fat were found (all P < 0.01), whereas no effect on visceral AT levels was observed (P > 0.05) under treatment. Subcutaneous fat mass gained under PPARγ agonist was the strongest predictor of the worsening in aerobic exercise capacity (P > 0.0001); no association was found with skeletal muscle fat infiltration nor visceral AT. Treatment with the insulin sensitizer PPARγ agonist rosiglitazone in patients with T2DM and CAD is associated with a worsening in aerobic exercise capacity, which seems to be mainly attributable to weight gain and subcutaneous fat mass expansion.