The thiazolidine-dione derivatives are a new class of oral blood-glucose lowering drugs in type 2 diabetes. They increase the sensitivity of target tissues to insulin, thereby reducing insulin resistance. They act by activation of a specific nuclear receptor--the peroxisome proliferator-activated receptor gamma (PPAR-gamma)--which increases transcription of certain genes involved in adipocyte differentiation and lipid and glucose metabolism. They increase glucose disposal, reduce hepatic glucose output and reduce both plasma glucose and circulating insulin. By reducing insulin requirements the hypersecretion of the beta cell can be diminished, thereby sparing beta cell function. Thiazolidine-dione derivatives reduce plasma glycosylated haemoglobin (HbA1c) by about 1 to 2%. Combination therapy with sulphonylurea derivatives or metformin seems to be more effective, i.e. lower dosages of either agent or both are sufficient to achieve the same reduction in plasma glucose and HbA1c as monotherapy. The thiazolidine-dione derivatives are generally well tolerated and the new drugs such as rosiglitazone and pioglitazone do not seem to be associated with idiosyncratic hepatotoxicity.